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SBY to Be Asked to Decide on Shipping Surplus Bontang LNG to Help Japan
March 19, 2011

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Indonesia may export surplus liquefied natural gas from its Bontang plant to Japan after the quake-stricken nation appealed to the world’s third-largest LNG exporter for more supplies, an official said on Friday. 

Energy officials could not say how much gas was available, but one government minister said the decision would go up to the president, given that Indonesia is trying to conserve LNG for its own growing domestic demand but also please Japan, a major infrastructure investor. 

Bontang is expected to see output fall 6 percent this year, but it has surplus LNG left over from last year that could be shipped to Japan, said Evita Legowo, director general for oil and gas at the Energy Ministry. 

“We may do that for the non-export committed LNG from the Bontang plant,” she said. 

Oil and gas regulator BPMigas said this week that 20 cargoes of Bontang LNG were available for auction, though there were also 40 cargoes awaiting approval to ship to Korea Gas Corp (Kogas) under a deal agreed last year. 

Energy Minister Darwin Zahedi Saleh said he has not yet signed the deal to ship Bontang LNG to Kogas as he is waiting for the result of discussions between the ministry and BPMigas on Japan’s request. 

Since Kogas, the world’s top corporate buyer of LNG, has already said it would supply 400,000 to 500,000 tons of LNG to Japan, it is possible some of the Kogas commitment could come from Indonesia. 

Japan’s vice minister of foreign affairs, Makiko Kikuta, met government officials in Jakarta on Thursday and asked the country to supply more LNG and also crude oil to replace a “massive shortage” of electricity. 

In trying to procure LNG, Japan has been dealing directly with producers and sometimes governments, bypassing traders and brokers in the spot market in search of secure supplies. 

However, Indonesia, the world’s No. 3 LNG exporter after Qatar and Malaysia, is increasing its use of natural gas at home to avoid costly imports and dwindling domestic supply.  

“It will be decided by the president. Personally, I think this is a sensitive issue to be answered. The impact will be very political,” Industry Minister MS Hidayat said.

Japan has committed up to $52.9 billion in investment over the next 15 years in Indonesia as Southeast Asia’s biggest economy tries to overhaul its infrastructure. 

Reuters