Train 3 Tangguh Project is hampered by Long-Term Contract Problem

KATADATA - Train 3 Tangguh project development by BP Indonesia in Papua is hampered because Perusahaan Listrik Negara (PLN) still refuses to ink the long-term sales and purchase contract to buy LNG from Train 3 Tangguh, as said by Djoko Siswanto, the director for upstream oil and gas business development in the Energy and Mineral Resources Ministry, on Friday, December 11, in Jakarta. But, this explanation is different than the one given by PLN. 

Head of fuel and gas division in PLN, Chairani Rachmatullah, said that the long-term deal with BP Indonesia has been inked one year ago. PLN has committed to purchase 12 cargos of LNG per year from Train 3, and another 12 cargos from both Train 1 and 2 altogether. And so, the total is 24 cargos, as said by Chairani to Katadata on Monday, December 14. 

But, in Djoko’s statement, until now PLN still refuses to ink the long-term deal, even though that deal is needed as a guarantee for further development of Train 3 Tangguh. In his opinion, PLN still refuses to ink the long-term deal with BP Indonesia because PLN still calculates the fluctuations or volatility of gas price. If PLN inked the long-term agreement, then the state-owned electricity company must pay the liquefied natural gas according to the price stated in the contract; even if later on the gas price plunge to become so cheap. 

Since there is still no solution until now, BP Indonesia has sent a letter to the Energy Ministry to help them finding the right solution. The ministry has replied BP Indonesia back, and said that BP Indonesia is allowed to export more LNG without the obligation to provide 40 percent of total production for the domestic needs. But if the domestic business players need gas, then BP Indonesia is obliged to make it its first priority.

Chairani’s explanation is also different than the statement of I.G.N. Wiratmadja Puja, the director general for oil and gas affairs in the Energy Ministry, saying that PLN could only absorb two cargos per year at most from the 14 produced cargos by Train 3 for the domestic cargos. “And so, there are 12 more cargos to go,” Wiratmadja added.