Japan to buy more LNG from Indonesia

The Jakarta Post , Jakarta | Fri, 08/24/2007 1:30 PM | Business

Ika Krismantari, The Jakarta Post, Singapore

Indonesia plans annual shipments of up to five million tons of liquefied natural gas (LNG) to Japan after their current contracts end in 2010, despite the country's plan to sell more of its gas domestically.

State-owned oil and gas company Pertamina, which handles sales of the country's LNG, will ship about two million tons of the total five million tons from the Senoro LNG plant in Central Sulawesi, which is expected to come onstream by 2010, the company's deputy president director, Iin Arifin Takhyan, told The Jakarta Post on Thursday.

Iin said the other three million tons, which was agreed to following the signing of the Japan-Indonesia Economic Partnership Agreement by President Bambang Susilo Yudhoyono and Japanese Prime Minister Shinzo Abe in Jakarta early last week, would be provided by other LNG plants.

Asked if the additional LNG exports to Japan would conflict with the government's policy of using its gas reserves domestically, Iin said the gas from the Senoro LNG plant would be exported to Japan due to the lack of infrastructure to supply it to the domestic market.

The fact that a Japanese company, Mitsubishi, is also involved in the Senoro LNG project as a majority shareholder, with a 51 percent stake, is another reason LNG from the plant will be shipped to the country, he said.

Japan had demanded Indonesia guarantee the continuity of its LNG exports as part of the partnership agreement. However, Indonesia was only able to commit to guaranteed LNG exports of three million tons a year when the current contracts end in 2010.

Under the current contracts, Indonesia ships 12 million tons a year to Japan.

Iin, who heads the negotiation team for the extension of LNG export contracts with Japan, said with Indonesian gas production limited due to a lack of new findings and aging fields, it was important for the government to prioritize the domestic gas market.

However, he said Pertamina was still open to more negotiations on the amount of gas that would be exported and at what price.

Of Indonesia's total annual LNG exports of 24 million tons, 12 million tons go to Japan.

Recently, Energy and Mineral Resources Minister Purnomo Yusgiantoro said Indonesia could increase its LNG export commitments if significant new gas discoveries were made.

He cited gas production from Inpex's Masela block in the Timor Sea and Chevron's Ganal block off the coast of East Kalimantan, which are currently under development and could be used to meet export demand.

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