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Spare LNG Has BPMigas Looking for Buyers
April 13, 2010

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Upstream oil and gas regulator BPMigas is seeking buyers of liquefied natural gas for 2011 because it expects excess capacity of as much as three million tons when an existing contract ends, an agency official said on Tuesday.

Indonesia, the world’s third-biggest LNG exporter after Qatar and Malaysia, has an 8.4 million ton per year contract due to expire in 2010 and a 3.6 million tpy deal ending in 2011, both with a group of Japanese firms.

In February 2009, six Japanese firms reached a deal in principle to extend their contract for Indonesian LNG from 2011 for 10 years, and agreed to purchase a combined three million tpy of LNG from 2011 to 2015, and two million tpy from 2015 to 2020.

The Japanese companies involved are Osaka Gas, Chubu Electric Power, Kansai Electric Power, Kyushu Electric Power, Nippon Steel and Toho Gas.

“We will sign a final agreement with Japanese buyers as soon as possible. We will cut our exports in 2011 and we will have excess capacity of 2.5 million to 3 million tons in that year,” BPMigas deputy head Budi Indianto said.

He said the fuel would be supplied from the Bontang plant in East Kalimantan.

“We will seek LNG buyers for possible short-term contracts until the local LNG receiving terminal operations are ready. We don’t know when the receiving terminal will be ready,” Budi said.

He said he would ask state-owned oil and gas producer PT Pertamina and state gas distributor PT Perusahaan Gas Negara to give a clear indication of when their floating LNG receiving terminals would be in operation.

“We have prepared the LNG to supply the local receiving terminals but it is not clear when they will begin operation,” Budi said.

Pertamina will build a floating receiving terminal near Jakarta, in a joint venture with PGN. Pertamina will also build a receiving terminal in East Java, and PGN will build a terminal in North Sumatra.

The terminals will have a capacity of between 1.5 million to two million tons per year each, and are due to be completed by the end of 2011 or early 2012.

Budi said BPMigas has also encouraged Pertamina to build a receiving terminal in Aceh near the Arun LNG plant.

Indonesia is seeking non-oil energy sources such as gas and coal to meet rising domestic demand for power and to reduce consumption of crude oil as its reserves dwindle. 

Reuters