India, China seen as new markets for RI gas

India, China seen as new markets for RI gas

SINGAPORE (AFP): Indonesia is looking at China and India as new markets for its massive natural gas reserves as the government moves to boost domestic demand with a plan to slash oil subsidies, industry experts said Wednesday.

Political turmoil in Indonesia, including separatist threats in oil and gas producing areas, were unlikely to derail plans to develop more gas fields and build a network of undersea pipelines to bring the commodity to land-based users, they said.

John Karamoy, president of the Indonesian Gas Association, said in a news briefing Southeast Asia's largest country has natural gas reserves estimated at more than 100 trillion cubic feet still to be tapped and marketed.

Sofian Farhan, director for natural gas supply at state-run oil and gas firm Pertamina, said China and India were emerging as potential export markets aside from traditional buyers like Japan, Thailand and South Korea as more fields are developed in the next 10 years.

Indonesia has earmarked production from its Tangguh field in Irian Jaya for the Chinese market, he said.

He said "discussions on the official level and company to company level" have started, a delegation from Pertamina was in China for further talks.

Natural gas from Indonesia's West Natuna field is to start flowing via a pipeline into Singapore by January next year, two months ahead of schedule, he said.

This will be under an US$8 billion contract with a consortium led by Singapore's Sembawang Corp. to purchase 325 million cubic feet of gas per day from Indonesia for 22 years.

Another contract with Singapore Power was expected to be signed next month and the laying of the pipeline commencing "very soon."

Last month, Malaysia's Petronas signed a milestone gas purchase agreement with Pertamina to buy 1.5 trillion standard cubic feet of natural gas from Indonesia's west Natuna sea field over 20 years.

Parallel to expanding the overseas market, the government was also expected to announce a cut in its huge subsidies to the oil sector which totaled $5 billion this year, Farhan said.

This would make the price of natural gas more competitive and boost domestic demand, he added.

A new law expected to be passed by parliament by mid-next year which would deregulate the natural gas industry was also expected to encourage investors.