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RI to sell LNG in spot market as PLN reduces order
Indonesia will sell 11 cargoes of liquefied natural gas (LNG) in Asia’s spot market after state electricity firm PLN said it was able to buy only six LNG cargoes this year, less than half of the 17 cargoes it initially ordered
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span>Indonesia will sell 11 cargoes of liquefied natural gas (LNG) in Asia’s spot market after state electricity firm PLN said it was able to buy only six LNG cargoes this year, less than half of the 17 cargoes it initially ordered.
The Upstream Oil and Gas Regulatory Task Force’s (SKK Migas) deputy for finance and monetization, Arief Handoko, said recently that PLN had reduced its order for LNG because the company would likely increase its use of coal and maximize the supply of piped gas.
“Besides, there’s also a policy that obligates PLN to optimize the use of piped gas before LNG. […] We need to sell it soon to prevent our inventory from being full,” he told reporters last week, adding that the 17 cargoes came from the Badak Natural Gas Liquids (NGL) plant in Bontang, East Kalimantan.
The Badak NGL plant is supplied by eight different gas producers, two of which are Italian energy company ENI SpA and state energy holding company Pertamina.
PLN vice president for public relations Dwi Suryo Abdullah could not be reached for comment on the reduction in the company’s LNG order.
Arief further said that selling it to state sub-holding gas company PT PGN was not an option as the firm prioritized natural gas supply. “So selling it on the international market is the sole option. But we need to obtain permission from the energy and mineral resources minister as we will have to sell it below the initial price,” he said, adding that Pertamina would act as the government’s representative in the global market.
Separately, SKK Migas deputy chairman Sukandar said it should not be difficult to sell the 11 LNG cargoes on the global market or spot market, pointing out that daily LNG transactions in the Asian spot market could reach 20 cargoes.
In March, the government gave the green light to British oil giant BP to export 84 cargoes of LNG from its Tangguh LNG plant in West Papua to Singapore, with the first shipment scheduled for next year.
The government is also in the process of selling another 40 cargoes of LNG from 2021 to 2025, said Djoko Siswanto, the Energy and Mineral Resources Ministry’s oil and gas director general, previously.
“LNG cargoes are still unsold for 2021 to 2025. We have 40 unsold LNG cargoes from BP and Bontang [Badak LNG plant in East Kalimantan],” he said.
Exporting LNG is nothing new for Indonesia. The country was among the top five LNG exporters in 2017. Based on ministry data, Indonesia exports LNG to China, Japan and Taiwan. It also exports natural gas through a pipeline from Sumatra and Natuna waters to Singapore and Malaysia.
As of April, SKK Migas recorded that 22.27 percent of the country’s total natural gas exports was LNG. Meanwhile, LNG made up only 10.55 percent of total natural gas domestic consumption.
LNG is different from liquefied petroleum gas (LPG). Indonesia still imports more than 70 percent of its LPG needs as a result of the country’s lack of gas supply that matches LPG characteristics.
Last year, the average volume of LNG exports reached 1,907 billion British thermal units per day (bbtud) or almost five times the average volume for LNG domestic utilization at 405.2 bbtud.
