Committee for LNG marketing planned

Committee for LNG marketing planned

A'an Suryana, The Jakarta Post, Jakarta

The government is to set up a special committee to coordinate
the marketing of the country's liquefied natural gas (LNG)
overseas, a senior official said on Saturday.

The Director General of Oil and Gas at the Ministry of Energy
and Mineral Resources, I'in Arifin Takhyan, said that without
coordination efforts, LNG exporters here could be embroiled in
unhealthy competition, which in turn could cause losses to the
state.

"Our proposal (for the establishment of the committee) has
been filed with the Ministry of Energy and Mineral Resources.

We hope that he (the Minister) will sign it within two or
three weeks," I'in told The Jakarta Post.

The special committee will take over from state-owned oil and
gas firm Pertamina, which for the past few decades has been
handling the marketing of Indonesian LNG overseas. Pertamina lost
its monopoly in 2001 following the approval of the new oil and
gas law.

This law says that LNG producers can directly take charge of
the marketing of their products overseas, in competition with
Pertamina.

According to the proposal, the committee will be chaired by
the minister of energy and mineral resources. The members will
include the director general of oil and gas, chairman of the oil
and gas implementing body (BP Migas), and the president of
Pertamina.

Pertamina had initially wanted to be left in charge of LNG
marketing following the failure of Indonesia to clinch an LNG
supply contract from China's Guandong province. The contract was
won by Australia.

The local unit of Anglo-American energy giant BP Indonesia was
appointed by the government to lobby the Chinese authorities to
secure the LNG supply contract. This was the first time a private
company was assigned to undertake overseas marketing for the
country's LNG. The LNG was supposed to come from BP's Tangguh LNG
project in Papua province.

The failure to win the Guangdong contract disappointed many
parties at home, including Pertamina, although BP won a smaller
contract from China's Fujian province.

Pertamina insisted that with 25 years experience in marketing
LNG overseas (turning Indonesia into one of the major LNG players
in the world), the government should restore marketing
responsibilities to the state firm.

The oil and gas company claimed that with a couple of giant
LNG projects here, Pertamina would be able to ensure security of
supply to would-be buyers, thus giving it a better chance of
winning overseas contracts.

Pertamina controls the Arun LNG plant in Aceh, and the Bontang
LNG plant in East Kalimantan.

"If there is damage in one LNG plant, Pertamina can request
other LNG plants in the country to cover its obligations," Ridwan
Nyak Baik, a spokesman for Pertamina, told the Post.

Ridwan said that as new overseas players had been entering the
global LNG market, coordination was crucial to help win supply
contracts on the overseas market.

But the government turned down the Pertamina proposal, deeming
it more beneficial to set up a special committee.

"By including BP Migas in the joint committee, the interests
of the contractors will be accommodated," I'in said.