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Indonesia to Start Talks With CNOOC on New Tangguh LNG Price

Indonesia will begin talks with China National Offshore Oil Corp. this year on new liquefied natural gas prices from the Tangguh plant in Papua, said an official at the nation’s energy regulator, BPMigas.

“We will start price negotiations this year which will be applied in 2013,” said BPMigas spokesman Gde Pradnyana in Jakarta today. “We are seeking the best price.”

Indonesia, the world’s second largest exporter of LNG after Qatar, is seeking higher sales after 2011 Asian spot prices increased the most since 2008. The cost of gas for prompt supply this year may climb to as much as $25 per million British thermal units from $15 as global demand surges, according to a Bank of America Corp. report dated yesterday.

The talks are part of a review carried out every four years under the supply contract, according to Pradnyana, who declined to give details on the price increase Indonesia is seeking in the negotiations.

The Tangguh project has a 25-year contract to supply 2.6 million metric tons a year to China, according to data compiled by Bloomberg. The project, which shipped its first LNG cargo in 2009, produces 7.6 million tons of LNG a year, according to the website of BP Plc, which has a 37 percent share in Tangguh LNG. Cnooc has 14 percent.

Long-term LNG prices are typically based on crude oil. The December official price for Indonesia’s flagship Minas oil is $112.52 a barrel, the equivalent of about $19.40 per MMBtu.

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