Just found this article from last month regarding the political...

Just found this article from last month regarding the political obstacles faced by an LNG export project in Sulawesi. I would have thought the same situation would apply to EWC - a potential show stopper??

Indonesia politics threatens Sulawesi LNG -sources
Wed Jun 17, 2009 1:21pm IST Email | Print | Share| Single Page[-] Text [+] By Muklis Ali

JAKARTA, June 17 (Reuters) - A huge LNG project in Sulawesi could be jeopardised after Indonesia's vice president urged that the gas be set aside for domestic use rather than exported, sources at the country's energy ministry said on Wednesday.

State oil firm Pertamina, Indonesia's PT Medco Energi International (MEDC.JK: Quote, Profile, Research) and Japan's Mitsubishi Corp. (8058.T: Quote, Profile, Research) have agreed to build the Donggi-Senoro plant in Sulawesi, which will have a capacity of 2 million tonnes per year.

The plant, due to be operational by 2012 or 2013, would give LNG production in Indonesia, the world's third-biggest exporter after Qatar and Malaysia, a much needed boost as the country struggles to juggle exports and local needs.

There has been pressure from lawmakers and the government to raise the gas price after an initial agreement to sell LNG to Japanese buyers, but the country's vice president recently intervened to say the gas should not be exported.

Vice President Jusuf Kalla, who is standing in presidential elections in July, said this month the gas from the Sulawesi project should be sold to the domestic market.

Kalla's chances of winning against President Susilo Bambang Yudhoyono seem slim at the moment, but the election could slow decisions on crucial project details, strengthening the chance of delays or the prospect of buyer and investor pullouts.

The project would be uneconomic if it just served the domestic market, an energy ministry source, who declined to be named because of the sensitivity of the issue at election time, said.

"The LNG plant has already entered the political arena," the source said. "The cost to develop gas fields and to build the plant is rising. It would be difficult to bring the gas to the domestic market in the form of LNG because of the high price."

The Sulawesi LNG plant, which will cost at least $1.4 billion to build, will receive natural gas from Pertamina and Medco.

"Pertamina and Medco have urged the government that the LNG should be exported to get economic value from the project and guarantee the investment from Japan," the source said.

Pertamina and Medco previously agreed to sell 1 million tonnes of LNG from the Donggi-Senoro plant to Chubu Electric Power Co (9502.T: Quote, Profile, Research) and 1 million tonnes to Kansai Electric (9503.T: Quote, Profile, Research). The contracts will run for 15 years.

A second energy ministry source said that Pertamina and Medco had already guaranteed some gas would go to the local market.

"It is difficult to approve the project under the current situation, especially during the presidential election," the second source said. "Because pressure to meet domestic gas demand for industry is a political issue in the campaign."

Medco President Director Darmoyo Doyoatmojo told Reuters in a June 3 interview he was "quite optimistic" on reaching a deal because of compelling economic reasons, although he warned against too much government pressure to raise gas prices.

Asked about the project, Pertamina spokesman Basuki Trikora Putra said only that it was still waiting for government approval. Mitsubishi officials could not immediately be contacted.

Resource nationalism has become a key issue ahead of the July 8 election and a number of candidates have made statements alleging foreign exploitation of mineral and energy resources.

A cabinet meeting would be needed to decide on key details on the Sulawesi LNG project, but progress is probably unlikely before the elections, strengthening the chance of delays or the risk of investors and LNG buyers pulling out.

Yudhoyono, now the favourite to win a second term, faces a challenge from Kalla and former president Megawati Sukarnoputri in the election.

With Kalla running last in most polls, the prospect of his winning next month's election currently seems slim.

Yudhoyono has not recently publicly commented on the Sulawesi project, but last month said Indonesia would maintain LNG exports despite pressures to allocate more for domestic needs.

"We will not stop exporting, of course...We have major gas development projects that are expected to secure a steady supply of natural gas for domestic and export needs," Yudhoyono said. (For a factbox on Indonesia's LNG click on [ID:nJAK454777]) (Additional reporting by Ed Davies; Editing by Clarence Fernandez)