Indonesia, China sign $8.5B gas deal

Australia's North West Shelf partners last month won a similar deal to supply LNG to China

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JAKARTA, Indonesia -- Indonesian state-owned oil giant Pertamina and China's National Offshore Oil Corp signed a 25-year $8.5 billion deal Thursday to supply liquefied natural gas (LNG) to a planned terminal in Fujian province.

Under the deal, oil major BP will supply 2.6 million tonnes of LNG a year for 25 years to CNOOC.

The gas will come from the giant Tangguh field in Indonesia's eastern province of Papua.

The Tangguh field was a candidate to supply LNG to another Chinese terminal in Guangdong province, but that $13.5 billion deal -- also for a 25-year supply -- was won last month by Australia's North West Shelf consortium. (Full story)

As part of the Australian deal, CNOOC took a stake in the North West Shelf's gas reserves and production.

Similar model

A similar model has been used for the Indonesian contract. A Pertamina official, who did not wish to be named, said that as part of the deal, CNOOC had bought a 12.5 percent stake in the Tangguh field from BP.

The official said BP had owned 49.66 percent of the field.

"This celebration of success of the project is a testament between our two countries which have a long history of close friendship," Indonesia's Energy Minister Purnomo Yusgiantoro said at the signing ceremony.

"It is hardly surprising that both our national petroleum companies have decided to work together."

Indonesia is the only Asian member of the OPEC oil cartel and is the world's biggest LNG supplier. Its traditional markets in Japan, South Korea and Taiwan take a combined 22 million tonnes of LNG annually.

Shares in Hong Kong-listed CNOOC Ltd are trading 0.47 percent higher late Thursday at HK$10.75. The broader market, measured by the Hang Seng index, is about 1.15 percent higher.

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