Indonesia's state oil company Pertamina said yesterday it was ready to offer liquefied natural gas (LNG) to China at a competitive price. Pertamina's President Director Baihaki Hakim said he would visit China in June to discuss LNG sales from the province of Irian Jaya where BP Amoco has natural gas reserves of about 14 trillion cubic feet.

"We will visit China in June. We have to be proactive to seek markets. I think Pertamina will be able to give (China) a competitive price," he told reporters. Hakim added China would be welcomed to invest in upstream and downstream LNG projects in Indonesia.

China plans to build its first LNG terminal with a capacity of three million tonnes per year LNG and an associated pipeline to supply gas to the southern province of Guangdong. BP has been chosen as the foreign partner in the $616 million project, but China has yet to decide who will supply the gas.

Hakim said the closure of Exxon Mobil gas fields in the troubled Aceh province last month had prompted Pertamina to accelerate plans to build a ninth LNG plant in Bontang and another Irian Jaya. Exxon Mobil said the temporary shutdown was the cumulative effect of dozens of security incidents over the past two years.

The shutdown halted output at the PT Arun NGL liquefied natural gas plant and forced utilities in Japan and South Korea to seek alternative suppliers. "Exxon Mobil has said technically they need 10 days to resume operation at the natural gas field if the security situation is safe," Hakim said.

"We must understand that the question is not only (about) safety in the operation area but also for the people," he said. Gunfire preceeded a blaze that raged at one of Exxon Mobil's closed gas fields in troubled Aceh province on Sunday, but the cause of the fire was unclear. National police chief Surojo Bimantoro said on Tuesday the Free Aceh Movement (GAM) attacked the Exxon Mobil gas field by mortar and caused the fire.

Meanwhile, Indonesia's Mines and Energy minister said he expected parliament to ratify a new oil and gas law by the end of the year. "This law will likely be enacted by the end of this year and it is believed it will be effective in attracting new investment and... establishing sustainable oil and gas development of optimal benefit to the country," Purnomo Yusgiantoro said in a speech at an oil and gas seminar.

He said parliament was currently debating the law aimed at improving national oil and gas resource management. Under the draft law, state oil company Pertamina's monopoly in the sector would be dissolved, including in the downstream oil products market and in distribution.

Pertamina President Baihaki Hakim told reporters the company welcomed new players but said state subsidies raised the question of when Pertamina's monopoly should be abolished. "Pertamina basically welcomes new players. That is our position," he said. "But the real issue is, I think, the public and some members of parliament are not ready yet for liberalisation. Why? Because how you will address the issue of oil subsidies?"

He said the draft oil and gas law allowed for a five-year transition period in which Pertamina would maintain its retail monopoly in order to allow the government to raise the price of oil products to market levels. Indonesia said it had allocated 41.3 trillion rupiah ($3.85 billion) in fuel subsidies in its 2001 budget.