September 22, 2010 / 6:04 AM / 9 years ago

UPDATE 2-Japan's Chubu Electric to buy LNG from Indonesia

* Chubu to buy 1 mln tonnes LNG a year from H2 2014

* Donggi-Senoro project expected to go on stream in 2014 (Adds details)

By Osamu Tsukimori

TOKYO, Sept 22 (Reuters) - Japanese utility Chubu Electric Power Co (9502.T) said on Wednesday it would buy liquefied natural gas (LNG) from the Donggi-Senoro project in Sulawesi in Indonesia.

Chubu, Japan’s third-biggest utility, said it would buy 1 million tonnes per year (tpy) of LNG for about 13 years starting in the second half of 2014.

Chubu officials said it expects to sign a contract on the purchase in October. It also said it is set to set up a joint marketing venture to sell part of the LNG it buys from the project to third parties.

State oil and gas firm Pertamina, together with Indonesia’s PT Medco Energi International (MEDC.JK) and Japan’s Mitsubishi Corp (8058.T), plan to build the Donggi-Senoro LNG plant with a capacity of 2 million tonnes per year.

The project requires $1.7 billion for upstream activities and $2 billion for downstream, and is expected to go onstream in 2014.

Indonesia Energy Minister Darwin Saleh agreed in June that 25-30 percent of production from Donggi-Senoro would go to the domestic market, with the rest allocated for export. [ID:nJAK28190]

While buying in term contracts, Chubu bought on the LNG spot market last year after an earthquake caused it to halt operations at its Hamaoka nuclear plant and ramp up thermal output to compensate.

Mitsubishi has a 51 percent stake in the project and Pertamina has a 29 percent stake, with Medco holding the rest. (Editing by Michael Watson)

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