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Japanese utilities turn to Indonesia for LNG

TWO Japanese utilities are buying a combined 2m tonnes per year of liquefied natural gas from a new export plant in Indonesia. Medco Energi Internasional said it had signed heads of agreement to supply 1m tonnes of LNG from the Donggi-Senoro plant on Sulawesi island to both Chubu Electric Power and Kansai Electric. Medco director Lukman Mahfoedz said the agreement, signed in February, would run for 15 years.
The plant is expected to be operational by 2012 or 2013. The 2m tonnes per year export project was launched 15 months ago by leading Japanese trading house Mitsubishi, Indonesia’s state oil firm Pertamina, and Medco Energi. Last August the partners signed a gas supply agreement to feed the $1.4bn liquefaction facility. Medco expected the government to approve the LNG facility by the end of this month, triggering a final investment decision. Mr Mahfoedz warned the project would be delayed if approval was not forthcoming.
The project has been criticised by Indonesian legislators for selling gas to the LNG plant too cheaply.

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