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View all search resultsGovt to renegotiate gas deal with Singapore
The government expects to soon meet a Singaporean envoy in Jakarta to further discuss a plan to renegotiate gas sales deal between two countries, Energy and Mineral Resources Minister Darwin Zahedy Saleh told reporters Friday
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T
he government expects to soon meet a Singaporean envoy in Jakarta to further discuss a plan to renegotiate gas sales deal between two countries, Energy and Mineral Resources Minister Darwin Zahedy Saleh told reporters Friday.
Indonesia plans to reduce gas exports to the neighboring country following strong increases in domestic demand. Darwin said he had previously communicated with Singapore.
"I have already communicated with Singapore. We talked as colleagues as we have helped each other a lot. Singapore has so far been our friend. Therefore, we will inform them about our domestic gas-supply issues in a friendly manner so that we can reach mutual understanding. After that, we can see what potential cooperation can further be made," Darwin added.
According to upstream oil and gas regulator BPMigas, Indonesia is exporting around 700 million metric standard cubic feet per day *MMSCFD* from several fields in South Sumatra and Natuna region in Riau islands. The export contracts will expire by around 2020.
Darwin said the amount of exported gas volume expected to be reduced from Singapore had not yet been decided.
Domestic gas consumption has increased sharply due to strong demand for the industry, especially from power sector.
The government recorded that the domestic gas consumption has increased from 3,541 MMSCFD in 2005 to 4,233 MMSCFD in 2009.
State gas distributor PT Perusahaan Gas Negara (PGN) estimated that the gas deficit would reach 385 billion British thermal units per day *BBTUD* this year and will continue to increase until reaching 713 BBTUD in 2015.
The soaring domestic gas demand has also been caused by state power firm PT PLN's program to switch its energy consumption from oil-based fuels to gas. PLN says it now needs 1 million MMSCFD of additional gas to fire its power plants.
Due to the gas deficit, PLN must use diesel to fire many power plants in Sumatra, a method that has sharply increased the company's operational costs.
Indonesian business communities support the government's decision to renegotiate gas export contracts with Singapore.
"We need gas to make our PLN healthy. Singapore must understand this situation," Indonesian Employers Association (Apindo) chairman Sofjan Wanandi said during a recent press conference on new power tariff.
BPMigas said the renegotiation might have impact on the projects' commercials. Oil and gas sector has been the backbone of Indonesia's state budget, contributing around 30 percent of the government's revenue.
