UPDATE 1-KOGAS cancels Tangguh LNG purchase deal-BPMIGAS

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JAKARTA Feb 1 (Reuters) - South Korean energy firm Korea Gas Corp (036460.KS) has cancelled a liquefied natural gas (LNG) purchase deal from the Tangguh project, an official at Indonesia's energy watchdog, BPMIGAS, said on Monday.

In 2008, Indonesia reached an initial agreement to supply 1 million tonnes per year of LNG to state-run KOGAS from 2010-2012. The LNG is slated to come from the Tangguh project in Papua, and to be part of the LNG lifted by U.S. firm Sempra Energy (SRE.N) and sold to other customers.

"The deal with KOGAS has been cancelled due to the economic situation in South Korea which has not improved," Amir Hamzah, BPMIGAS official, told Reuters.

"We will seek another possible buyer of the 1 million tonnes per year of LNG. We can't produce LNG without a buyer," Hamzah said.

Sempra has a 20-year contract to lift 3.6 million tonnes per year (tpy) of LNG from the 7.6 million-tpy Tangguh project, led by BP (BP.L). It has the right to divert half its volumes to customers other than its own new terminal in Mexico.

Another BPMIGAS official said it was still in talks with Japan's Chubu Electric Power Co (9502.T) on supplying 0.5 million tpy of LNG for three years, also from Tangguh.

Indonesia's BP unit has previously said it will ship 101 cargoes of LNG in 2010 from its Papua plant, lower than a previous estimate from BPMIGAS for 116 cargoes.

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 the country's third LNG production centre.

For a FACTBOX on Indonesia's LNG plants and projects click on [ID:nJAK454777] (Reporting by Muklis Ali; Editing by Michael Urquhart)