BP Wants CNOOC to Pay Market Price for Tangguh LNG

BP wants China National Offshore Oil Company (CNOOC) to pay market price for gas produced at Indonesia’s Tangguh plant, news agency Reuters reported.

The Chinese energy major pays less than $4 per million British thermal units (mmBtu) for the LNG which is well below the Asian LNG spot price of around $17 per mmBtu, and a steep discount to prices for most long term supply contracts, Reuters said.

 "(China) can afford it. They are importing LNG along the coastal market and they are paying for gas at Asian market prices," William Lin, BP's Asia-Pacific president, told the news agency, confirming the company was still in price talks with CNOOC.

BP's 25-year supply deal with CNOOC, for 2.6 million tonnes of LNG a year from Indonesia's West Papua province to China's second LNG terminal in Fujian, was signed in September 2002.

"The market has obviously changed significantly from when we did that contract and we believe it should be adjusted to market prices," Reuters quoted Lin as saying.

Sign-up for our free weekly newsletter update via email here