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Hungary seeking to revive LNG talks with Indonesia

Hungary is seeking to revive talks on the possibility of buying liquefied natural gas (LNG) from Indonesia to reduce its dependence on Russian gas.

The request was made Wednesday during a meeting in Budapest between Economics and Transport Minister János Kóka and Indonesia's Trade Minister Mari Elka Pangestu, who is currently on an official visit to Hungary. The Hungarian minister said that the LNG from Indonesia would be shipped to an LNG terminal currently being jointly developed by Hungary and Croatia. „Hungary is jointly developing an LNG receiving terminal with Croatia. With that in mind, we would like to look into the possible purchase of LNG supplies from Indonesia,” Kóka told the Indonesian trade delegation during the meeting. Talks on LNG sales to Hungary began during the administration of former President Megawati Soekarnoputri, when the then government was offered a role in the development of the LNG terminal. „I think we will touch on this further in October,” he said referring to his scheduled visit to Indonesia, when he will sign an agreement on the establishment of an Indonesia-Hungary Joint Ministerial Committee aimed at strengthening economic ties between the two countries.

Although Indonesia is currently struggling to meet its LNG export commitments to Japan, South Korea and Taiwan due to the decline in the country's natural gas production and the shifting of supplies to the domestic market, Mari said that she would discuss the request with the relevant ministries in Jakarta. Aside from the question of LNG, Kóka said that many Hungarian companies were interested in participating in infrastructure, water management, power, coal mining, telecommunications and IT projects in Indonesia. „We are also prepared to supply military technology, refurbish radar equipment, and to help in other areas, such as the procurement of components for soviet military equipment,” Kóka said.

To finance trade between the two countries, the Hungarian Central Bank through its Export and Import Bank, will allocate €16 million ($21.3 million) this year, with 35% of it being used to fund educational cooperation between the two countries, and the rest to subsidize export-import loans for private-sector firms. This allocation is expected to have increased threefold by 2011. An agreement on financial assistance, is scheduled to be signed by the bank and the Indonesian government some time in August. In order to improve trade relations, Mari requested the support of the Hungarian government for Indonesia's plan to use the country as a hub for penetrating the Eastern European market.

Earlier in the day, the head of the Indonesian National Agency for Export Development (BPEN), Bachrul Chairi, signed a memorandum of understanding on trade and investment with Hungarian Investment and Trade Development Company director Gjorjg Retvaviki. „Basically, we will regularly provide each other with the necessary information on trade and investment opportunities so as to support private firms from both countries with their trade and investment plans,” Bachrul said. Total trade volumes between the two countries from 2002 until 2006 has shown a persistent decline, dropping by an average of 3.21% a year. Total trade volume dropped by 7.34% in 2006 compared to the year before, despite an increase in Indonesia's exports to Hungary. (