JAKARTA - Talks between Indonesia and Korea Gas Corp over liquefied natural gas (LNG) shipments have been temporarily halted, which may delay deliveries, an official at Indonesia's energy watchdog said on Tuesday.

In 2008, Indonesia reached an initial agreement to supply 1 million tonnes per year of LNG to state-run KOGAS from 2010-2012.

The LNG is slated to come from the Tangguh project in Papua, and to be part of the LNG lifted by U.S. firm Sempra Energy and sold to other customers.

KOGAS is not cancelling the deal, but they want a temporary halt on the details of the LNG talks, Budi Indianto, the deputy head of the energy watchdog, BPMIGAS, told reporters.

However, the delivery may be delayed too, he added.

The official said the reason KOGAS wanted the temporary halt was because economic conditions in South Korea had not revived.

Sempra has a 20-year contract to lift 3.6 million tonnes per year (tpy) of LNG from the 7.6 million-tpy Tangguh project, led by BP. It has the right to divert half its volumes to customers other than its own new terminal in Mexico.

BPMIGAS said in a statement on Tuesday that it was still in talks with Japan's Chubu Electric Power Co on supplying 0.5 million tpy of LNG for three years, also from Tangguh.

The process of the negotiations is at the stage of finalising of the purchasing agreement, BPMIGAS said.

Indonesia, the world's third-biggest LNG exporter, has been counting on Tangguh to help make up for declining production at other projects.

The plant in the remote Papua province in eastern Indonesia is the country's third LNG centre.

(Reporting by Muklis Ali; Editing by Ed Davies)

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