Friday July 3, 02:49 AM
UPDATE 1-Indonesia's first Tangguh LNG sent to South Korea
JAKARTA, July 3 (Reuters) - The first delivery of liquefied natural gas (LNG) from the BP-led Tangguh project in Indonesia's Papua has started, Energy Minister Purnomo Yusgiantoro said on Friday.
One LNG cargo from the $5 billion project was being delivered to South Korea, the minister said, after it was switched from Fujian in China because a terminal was not ready there.
'I have been there (to Tangguh) last week and everything is okay. The first cargo has already gone to South Korea,' Yusgiantoro told reporters. He did not specify what South Korean firm would receive the cargo.
The project has supply contracts with South Korean firms K-Power and POSCO (005490.KS - news) .
Indonesia, the world's third-biggest LNG exporter, has been counting on Tangguh to help make up for declining production at other projects.
The plant in the remote Papua province in Eastern Indonesia is due to be the country's third LNG centre with a capacity to produce 7.6 million tonnes per year (tpy) via two trains.
The project, which had been put back several times due to technical problems, including a damaged valve, comes on stream as falling global demand has caused a glut of LNG supply and tumbling prices.
Asian LNG prices peaked above $22 per British thermal unit (mmBtu) last summer, but have since sagged to below $5.
Tangguh has several foreign supply contracts, including a 2.6 million tpy contract with China National Offshore Oil Corp (CNOOC (0883.HK - news) ).
The deal struck with China has become a sensitive issue ahead of Indonesia's presidential election on July 8, with some politicians slamming the gas price agreed under the previous government of former president Megawati Sukarnoputri as too low.
There has also been some calls ahead of the election for Indonesia to allocate more gas to the domestic market rather than for exports.
U.S. firm Sempra Energy (NYSE: SRE - news) also has a 20-year contract to lift 3.6 million tpy with the right to divert half to customers other than its own terminal in Mexico.
(Reporting by Muklis Ali; Writing by Ed Davies)
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