Indonesia Seeks Higher Gas Price from South Korea

After having negotiated higher price with China for Tangguh gas, Indonesia is looking to renegotiate another gas contract with South Korea, according to Jakarta Post newspaper.

“Negotiation with China was the most difficult, but we succeeded. After this, our team will work [to renegotiate gas] for [South] Korea,” Energy and Mineral Resources Minister Jero Wacik said on Monday, in reference to the renegotiated selling price of gas to Fujian province in China.

Under the revised contract, Chinese state-owned oil and gas firm China National Offshore Oil Corp. (CNOOC) has to pay a ceiling price of $8 for every million British thermal units (mmbtu) of liquefied natural gas (LNG) from the Tangguh plant. 

The new renegotiation would involve South Korea’s K-Power and Posco, Jakarta Post says.

Renegotiation of the gas selling price with the South Korean companies would likely be tougher because, unlike the deal with Fujian, there were no terms allowing for a price review under the existing agreement, said Widhyawan Prawiraatmadja, the Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) deputy for commercialization.

Gas sold to K-Power and Posco, which also comes from the Tangguh plant, is priced at $4.10 per mmbtu, according to Widhyawan. The total volume sold reaches 1 million tons per year or 16 cargoes, distributed equally to the two firms.

A cap on the JCC, which is currently $38 per barrel for the South Korean customers, has resulted in the gas being sold below average market price.