ConocoPhillips sees strong prospects in RI gas market
Tony Hotland, Jakarta
A top official from leading U.S. oil and gas company ConocoPhillips expressed on Monday confidence over the gas market in Indonesia, citing abundant supply and improving political stability as supporting factors.
ConocoPhillips Asia-Pacific president R.M. Lance said that as the domestic gas market was growing, more infrastructure needed to be improved.
"We think the market really has a good future here. I mean, there's a lot of gas in Indonesia. It's just a matter of how quickly the market develops ... how quickly can the industrial users and the infrastructure get in place in West Java and East Java to support more gas coming in. That's the balance that'll have to be struck over time," Lance told The Jakarta Post.
ConocoPhillips signed on Monday a US$4.3 billion gas deal with state gas distributor PT Perusahaan Gas (PGN). The U.S. company agreed to sell 2.3 trillion cubic feet to PGN within 17 years starting from 2007.
"There's lots of supply here and we think there are going to be a lot of market opportunities down the road, so we're very interested," Lance said.
Indonesia has natural gas reserves of 140 trillion cubic feet, with only 80 trillion cubic feet of gas contracted out. Indonesia is the largest liquefied natural gas (LNG) producer in the world, exporting 55 percent of its annual production of 3 trillion cubic feet.
With oil prices at record new highs, Lance acknowledged that the situation provided an advantage for gas companies.
"People are spending a lot of money on diesel fuel to generate electricity, and to power their plants. They are likely to want gas as it's cheaper now than oil or diesel. I think our gas is a marketable commodity and it should offer an incentive over diesel," he said.
Lance added that he believed Indonesia was well on its way to regaining confidence from foreign investors due to its strengthening political stability.
"I think Indonesia's gaining in confidence. There are still some companies out there questioning and watching closely to make sure, but certainly the (May and July) elections seem to have gone well. Everybody saw they went very well. I think that has added a lot to the confidence that investors have in Indonesia," Lance affirmed.
Currently, ConocoPhillips has 13 production-sharing contracts (PSC) with the Oil and Gas Upstream Regulatory Agency (BP Migas), from Sumatra to Papua.
Asked about ConocoPhillips' future plans in Indonesia, Lance said simply, "of course, we would like to have more gas to market -- to sell more gas.
"Currently, we have another 2 trillion cubic feet (TCF) we could sell. We're having conversations with PGN, and we are in discussion with (state electricity company) PLN, and other markets both within Indonesia and outside, trying to sell that gas," he said.
Moreover, Lance noted, Indonesia needed to work harder to assure national stability and security to entice more foreign investors.