Bloomberg News

Sempra Agrees to Amend LNG Contract With Tangguh, BP Says

February 17, 2012

(Updates with BPMigas comments in fourth paragraph.)

Feb. 16 (Bloomberg) -- Sempra Energy agreed to amend a supply contract with the Tangguh liquefied natural gas plant in Indonesia’s West Papua province, operator BP Plc said.

BP declined to provide details on the amendment because the contract is confidential, William Lin, president for the Asia Pacific region, said today in an e-mailed response to questions.

Indonesia, the world’s second-largest exporter of LNG after Qatar, has a contract to supply 3.7 million metric tons a year to Sempra from the Tangguh plant, according to data compiled by Bloomberg. The plant produces 7.6 million metric tons of LNG a year, according to the website of BP, which has a 37 percent share in the project.

Indonesia’s oil and gas regulator and BP will discuss the amendment as the nation seeks to divert at least 70 percent of LNG supplies earmarked for Sempra’s import terminal in Mexico to other buyers, Rudi Rubiandini, BPMigas’s deputy for operation management, said today in Jakarta.

“It will give us flexibility to sell the fuel to domestic buyers or to export to market such as Japan at higher prices,” said Rubiandini in a phone interview. “It’s a good start on the negotiation.“

According to the contract with Sempra, BP may divert 50 percent of the LNG, provided other buyers are willing to pay $1 per million British thermal units more than the U.S. company’s price, the government said in 2007 at the start of the project. Rubiandini confirmed this arrangement.

The diversion will help Indonesia to get higher prices and meet growing domestic demand. The nation is increasing natural gas and coal usage in power stations to compensate for declining oil production in aging fields.

--Editors: Mike Anderson, Christian Schmollinger.

To contact the reporter on this story: Fitri Wulandari in Jakarta at fwulandari@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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