Indonesia may buy two LNG cargoes from Oman
Leony Aurora, The Jakarta Post, Jakarta
Indonesia is looking at buying two cargoes of liquefied natural gas (LNG) from Oman to meet export commitments and swap supplies to be used by fertilizer plants in Aceh.
If an agreement was reached, one cargo, about 2.9 trillion british thermal unit (btu) or 125,000 cubic meters in volume, would be delivered at the end of the year while the other would come early next year, Coordinating Minister for People's Welfare Alwi Shihab said on Wednesday.
Alwi has been assigned by President Susilo Bambang Yudhoyono to hold talks with Oman and Qatar to secure the LNG cargo.
The delivery schedule and prices would be discussed with state oil and gas firm PT Pertamina and the Oil and Gas Upstream Regulatory Agency (BP Migas), he said.
Qatar had also "responded positively" to providing cargoes in 2006, Alwi said. "They said they would be glad to provide (cargoes) as it was in Aceh's interest," he said.
The amount of LNG to be sourced from Qatar had yet to be determined, he said.
Indonesia has been trying to import LNG cargoes from the spot market and has asked other producers to swap their contracted shipments to Asian buyers. The government wants to use the gas to supply fertilizer plants in Aceh that face closing down after a natural gas contract with ExxonMobil, a major gas producer in the province, expired in early July.
Exxon continues to supply fertilizer producer PT Pupuk Iskandar Muda (PIM) with gas equal to one cargo of LNG -- sufficient for two months' operation -- and the government has guaranteed it would find one cargo as a replacement.
Separately, PIM president director Hidayat Nyakman said that the fertilizer producer would not be able to pay as high as US$6.5 per million British thermal unit (mmbtu) of gas as committed previously.
"Global fertilizer prices are going down," he said, adding that the company was still calculating the ceiling of the affordable price of gas.
Fertilizer plants in Aceh are allowed to export their products to pay for gas at higher prices. The government will cover the difference if the LNG cargoes turn out to be more expensive than the company's ability to pay.
PIM used to buy gas at $2.3 per mmbtu, roughly a third of what it is now committed to paying, from Exxon.
PIM has two plants, each with a capacity of 1,700 tons production of fertilizer a day. Due to the lack of natural gas supplies, the company has been operating only one plant at a time.