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tate-owned electricity firm PT PLN has signed initial agreements with a number of overseas gas producers that will supply the company in the future.

According to PLN oil and gas division head Suryadi Mardjoeki, the electricity firm has established a so-called master sales agreement with the suppliers, including Shell and others from Qatar and Japan.

'€œNow, I'€™m waiting for a deal with supplier[s] from the US '€” a kind of deal that allows me to ask for a direct delivery [of gas] when I need it,'€ Suryadi said.

PLN'€™s demand for gas continues to grow, to feed its power plants, in line with the government'€™s appeal to boost domestic utilization of the commodity to reduce the country'€™s dependency on oil.

Indonesia is estimated to have a quite significant amount of natural gas resources '€” around 104 trillion standard cubic feet (tscf) in proven and 48 tscf in potential gas reserves. That figure makes the country the 13th-largest owner of proven natural gas reserves in the world and the second-biggest in Asia Pacific after China, according to the International Energy Agency.

Despite the potential, most of the gas is sold overseas due to poor infrastructure that hinders distribution to domestic players.

Several gas infrastructure development projects are in place, including floating storage regasification units (FSRU) in Lampung and West Java that would ease distribution from resource-rich areas in the eastern part of the country to resource-hungry areas, particularly in Java.

To expand its gas usage, PLN has also developed a delivery mechanism of compressed natural gas (CNG) to supply its power plants in more areas.

PLN is targeting to absorb 431 trillion British thermal unit (TBtu) of gas this year, an increase from 410 TBtu last year.

However, supply issues are of concern to PLN, which has to compete with other gas buyers to meet its growing demand.

Moreover, Indonesia'€™s gas production is estimated to start declining in the next few years as existing gas fields have been exploited. Meanwhile, a number of new, big gas projects have as of now stalled due to various reasons.

Suryadi said PLN would need a total of 70 cargoes in 2017.

Out of the total, the company already has an allocation of 22 cargoes from Bontang LNG in East Kalimantan and 12 cargoes from Tangguh LNG in West Papua. The company still needs to secure supply for the remainder.

PLN needs 28 cargoes of LNG this year.

Figures from oil and gas regulatory task force (SKKMigas) show that 165 cargoes of liquefied natural gas (LNG) were produced in the first six months of the year. Out of the total, 16 cargoes were absorbed by domestic players while the remainder was sold overseas.

'€œIt was seven cargoes lower for LNG exports and one cargo higher for domestic absorption compared to those in the first half of last year,'€ SKKMigas commercialization director Widhyawan Prawiraatmadja said.

Besides PLN, other state-owned companies, such as gas distributor PT Perusahaan Gas Negara (PGN) and oil and gas giant PT Pertamina, have also secured gas supplies from overseas.

Pertamina has signed an agreement with US-based Cheniere Energy Inc. on LNG supplies, while PGN recently said that it had purchased a stake in a shale gas field in the US.