Early renegotiation of gas selling price with China National Offshore Oil Company (CNOOC) has ended in deadlock as the ceiling price proposed by CNOOC was seen as too low, according to Asian Pulse. Indonesia has signed a long term contract to supply China's Fujian province with 2.6 million tons of liquefied natural gas (LNG) annually from Tangguh, Papua. Under the agreement in 1992 the LNG price
was tide with crude oil price or around $2.4 per MMBTU based on a ceiling price of $25 per barrel of crude oil. The ceiling price is no longer acceptable to Indonesia with the soaring crude oil price at present. Currently the LNG price is around $8 per MMBTU based on a crude oil price of $65 per barrel. CNOOC rejected an offer from Indonesia and proposes a ceiling price lower than proposed by the government, which hopes to discuss that matter again with CNOOC before the first shipment is made in 2008 after the completion of the construction of an LNG Plant
to be operated by BP in Tangguh.
(Source: Asian Pulse)