Japan asks for better LNG prices<\/p>\n
Fitri Wulandari, The Jakarta Post, Jakarta<\/p>\n
Japan says it is still interested in buying liquefied natural gas
\nfrom Indonesia but wants more competitive terms and conditions in
\nfuture contracts.<\/p>\n
Japan's Director General of Natural Resources and Energy
\nPolicy at the Ministry of Economy, Trade and Industry Hiroyuki
\nIshige said Indonesia remained a very important LNG supplier to
\nJapan.<\/p>\n
However, Japanese buyers, such as electricity companies,
\nexpect "improving terms and conditions" in future contracts.<\/p>\n
"We hope the (future contractual) conditions will have
\neconomical advantages and be more competitive for us," Hiroyuki
\nsaid at a media briefing.<\/p>\n
Asked about prices and contract lengths preferred by Japanese
\nbuyers, Hiroyuki said it depended upon the outcome of discussions
\nbetween buyers and their counterparts in Indonesia.<\/p>\n
"I don't know the period of future contracts. This is a
\nbusiness issue, and the government does not intervene in business
\ndeals," Hiroyuki remarked.<\/p>\n
Hiroyuki was in Jakarta to attend the Indonesia-Japan Energy
\nRoundtable (IJERT) meeting along with some 38 delegates
\nrepresenting Japan's energy industry, consultants, trading houses
\nand associations.<\/p>\n
Japan is one of Indonesia's traditional LNG buyers. Others are
\nSouth Korea and Taiwan.<\/p>\n
The government has been campaigning both the Japanese
\ngovernment and businesses as some LNG sales contracts with
\nJapanese buyers expire in 2010. Among the buyers are Kansai
\nElectric, Kyushu Electric, Nippon Steel, Tohoku and Tepco, with
\ntotal contracts for 10.15 million tons of LNG per year.<\/p>\n
Should the Japanese firms not renew their contracts, Indonesia
\nwould lose billions of dollars of potential revenue.<\/p>\n
Indonesia faces tough competition from LNG producers such as
\nAustralia, Qatar and Russia, who have been aggressively
\ncampaigning Japan to switch to them by offering lucrative
\ncontracts.<\/p>\n
Reports say Japan wants more flexible, short-term contracts
\nwith Indonesia. At present, LNG contracts can be for up to 25
\nyears. Japan also asks that LNG supply be taken from different
\nsources and not just one.<\/p>\n
Currently, Indonesia has two LNG plants: one located in
\nBontang, East Kalimantan, and the other in Arun, Aceh, with a
\ntotal production capacity of 31.6 million tons.<\/p>\n
A third LNG plant, Tangguh, is being developed by a consortium
\nled by Anglo-American energy group BP Plc at the Bird's Head area
\nof Papua.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
\nsaid the government had explained the advantages of maintaining
\nIndonesia as Japan's LNG supplier.<\/p>\n
"We have multi sources, better pricing and better proximity
\ncompared to Middle East sellers. We also offer flexibility (in
\nterms and conditions) in contracts," Purnomo said.<\/p>\n
According to Purnomo, the government has submitted initial
\nproposals for extension of the contracts. The government expects
\nto get 12 million tons per year for the next contracts.<\/p>\n
IJERT is an annual meeting organized by the Indonesian
\nMinistry of Energy and Mineral Resources with Japan's Asia-
\nPacific Energy Forum (APEF). Monday's meeting was the fourth.<\/p>\n
In the forum, both parties discussed various issues concerning
\ncooperation in the energy sector, including transfer of
\ntechnology and exchanging information on energy policy.<\/p>\n
Purnomo said the forum had become significant amid the change
\nin the global LNG market from seller-driven to buyer-driven due
\nto the increase in producers.<\/p>\n
The forum is expected to formulate a strategic partnership
\nbetween both countries to increase energy supply and demand
\nsecurity.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/japan-asks-for-better-lng-prices-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}