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Local buyers not taking up allocated gas
Some local buyers are still unable to accept gas allocated to them due to poor infrastructure, despite the governmentâs attempt to boost gas usage in the domestic market
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ome local buyers are still unable to accept gas allocated to them due to poor infrastructure, despite the government's attempt to boost gas usage in the domestic market.
The Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) acting chief, Johanes Widjonarko, said that four cargoes of liquefied natural gas (LNG) could not be used by gas distributor PT Perusahaan Gas Negara (PGN) and fertilizer firm PT Pupuk Iskandar Muda (PIM).
'PGN wants to return two cargoes previously allocated to its Lampung floating storage and regasification unit [FSRU]. PIM also wants to return two cargoes,' Widjonarko said.
He added that the oil and gas regulator was now struggling to find local buyers for the four LNG cargoes, meaning that they would likely be sold overseas.
'The gas is already under contract [with PGN and PIM]. If they plan to return the cargoes, we will have to find new buyers. We cannot allow the canceled cargoes to cut production at gas wells because any interruption will damage the wells,' Widjonarko said.
A previous 18 cargoes of gas were rejected by domestic companies. They were eventually sold to BP Trading.
Indonesia, whose estimated gas reserves are large, is trying to encourage a greater allocation of the product to the domestic market.
These efforts are part of an attempt to reduce the nation's use of oil and its byproducts, which have been a major contributor to the worrisome current-account deficit of Indonesia, a net importer of oil.
The country's known gas reserves are the second-largest in the Asia-Pacific region after China, and the 13th-largest in the world, according to the International Energy Agency.
However, most of the gas is sold overseas, as domestic sales are hampered by poor distribution infrastructure.
PGN received a gas allocation of five cargoes for its FSRU located in Lampung this year. One cargo, which was used for the commissioning of the FSRU, was delivered last month from the Tangguh plant in Papua. The delivery schedule for the remaining four cargoes remains uncertain.
PGN is to distribute the gas to buyers in Jakarta, Banten and West Java.
PGN's head of external communications, Irwan Andri Atmanto, stated that the delivery of the other cargoes was pending PGN's attempt to secure buyers for gas distributed through the company's pipes.
'The government's commitment is to deliver five cargoes this year and a further 14 next year. PGN is trying its best to take up the allocated gas,' Irwan said.
He declined to discuss further the company's plan to reject a further two cargoes, as claimed by SKKMigas.
This year, the allocation of LNG for the domestic market reached 38 cargoes, with 25 cargoes distributed in 2013.
The 38 cargoes include 16 cargoes from the Tangguh plant, with five cargoes destined for the West Java FSRU, five for the Lampung FSRU and six to PIM.
The remaining 22 cargoes come from the Bontang plant operated by PT Badak NGL in Kalimantan, which will deliver all of its LNG to the West Java FSRU.
