Mont, this appeared in Reuters yesterday...preceding Jakarta...

Mont, this appeared in Reuters yesterday...preceding Jakarta Post article.

Also seems like Tokyo Gas are doing a little bit of back tracking.

http://in.reuters.com/article/oilRpt/idINJAK48725420100325?sp=true

BPMIGAS considering a penalty for Energy World Corp.

* Tokyo Gas has not made formal decision on LNG purchase (Recasts, adds quotes, background)

JAKARTA, March 25 (Reuters) - Indonesia's oil watchdog on Thursday said it will warn Australia-based Energy World Corp (EWC.AX: Quote, Profile, Research) that it does not yet have permission to sell liquefied natural gas (LNG) to Tokyo Gas Co (9531.T: Quote, Profile, Research).

Tokyo Gas, Japan's biggest natural gas utility, announced plans this week to buy 500,000 tonnes of LNG a year from Energy World's LNG project in South Sulawesi province. [ID:nTOE62N06J]

But BPMIGAS, the oil, gas and mining regulator, said the proposed deal would be scrutinised because new LNG facilities need to be built for any sale.

"We have not received a proposal from them (EWC) to build an LNG plant. So how can they secure a contract with another party without our knowledge," Agus Sapto Rahardjo, BPMIGAS senior manager for LNG, told reporters.

"This violates regulations. We will send a warning to EWC."

EWC was not immediately available for comment.

A spokesman for BPMIGAS said the agency will consider "administrative sanctions" against Energy World over its move to sign a deal with Tokyo Gas without the agency's knowledge.

"BPMIGAS could not accept EWC's move. They never asked for BPMIGAS's involvement in their negotiations with other parties. They never submitted a proposal on the LNG plant that they plan to build," Sulistya Hastuti, BPMIGAS spokesman, told Reuters.

A senior Tokyo Gas executive in Tokyo told Reuters on Thursday that the firm had just signed a basic agreement and had not yet made a formal decision.

"I haven't read the report, but we have just won an exclusive negotiating right for the purchase of LNG from the project. We have yet to make a formal decision whether or not we will in fact make the purchase," Tokyo Gas general manager of corporate planning, Takashi Uchida, told Reuters.

Tokyo Gas had previously said it planned to participate in the project by taking stakes in the Australian company's units operating in the Sengkang project, and purchase 500,000 tonnes of LNG per year after 2012 from the project.

EWC's Indonesian unit plans to build a small LNG plant with a capacity of 500,000 tonnes a year, a company official said in January.

Energy Equity Epic Sengkang, the EWC unit, operates a natural gas block in South Sulawesi province. [ID:nJAK186603]

Tokyo Gas also said on Wednesday that EWC plans to build three more such plants for a total production capacity of 2 million tonnes per year, with production scheduled to start in 2011.

Indonesia, the world's third-largest LNG exporter behind Qatar and Malaysia, is seeking non-oil energy sources such as natural gas and coal to meet rising domestic demand for power and to reduce consumption of crude oil as its reserves dwindle. (Additional reporting by Osamu Tsukimori in TOKYO) (Reporting by Muklis Ali; Writing by Fitri Wulandari; Editing by Sara Webb and Ed Lane)