China National Offshore Oil Corporation (CNOOC) is fighting in Indonesia to get the price it is paying for LNG cut. The spat has turned ugly over CNOOC’s bid to renegotiate its contract with Tangguh LNG in West Papua and the matter could go to court, the national government in Jakarta has said.

The Tangguh LNG export contract with CNOOC was first signed in 2002 to deliver gas to China’s first import terminal in Guangdong. At that time, the agreed gas price reached was $ 2.4 per million metric British thermal units (mmbtu). The contract has since been the subject of renogotations twice, in 2006 and 2008 with the price now set at $3.35 per mmbtu.

A new price was meant to have been set in May this year by Indonesia but the two parties have not found agreement. Indonesia has been pushing for a $7 price, commensurate with where international oil prices stand today. CNOOC has baulked at this doubling of price.

If the stalemate continues an international arbitration is likely.

Other Indonesian gas clients, notably the Japanese pay up to $17.5 per mmbtu.