Indonesia needs more investment in gas industry

Frits H. Pangemanan

NUSA DUA, Bali (JP): Indonesia, which has successfully supplied natural gas to buyers in Asian and Pacific countries for over the last 20 years, is inviting foreign and domestic investors to develop its gas industry in anticipation of rapidly increasing demand in the region.

"In order to maintain our consistency in the supply of gas, Indonesia has made the commitment to develop its large gas resources throughout the country," Minister of Mines and Energy I.B. Sudjana said at the opening of the third five-day gas information exchange conference, Gasex '94, here yesterday.

He said that many countries in the region have expressed expectations that Indonesia will be able to become their main supplier of gas in the future.

Many of them are fully aware of the possibility of gas becoming the main energy resource in the future and Indonesia can take advantage of this due to its enormous reserves of natural gas, he said.

"Indonesia will require a huge capital investment to exploit its gas reserves. However, there is stiff competition among countries, especially in the Asian-Pacific region, for the kind of capital investment this exploitation will require," Sudjana told the 400 gas industry executives participating in the conference.

He was optimistic that foreign investors will be interested in doing business in Indonesia's gas industry because the country has extensive experience in supplying gas to buyers without interruption.

Director General of Oil and Gas Suyitno Patmosukismo, told The Jakarta Post during a break at yesterday's conference, that Indonesia still needs investors for the establishment of its eighth natural gas liquefaction unit, to be called Train-H, in Bontang, East Kalimantan.

He said Indonesia has secured the funds for Bontang's seventh unit, Train-F, whose construction is expected to start next year.

Indonesia, through the state oil and gas company Pertamina, now produces 26 million tons of liquefied natural gas (LNG) plants in Bontang and Arun in the northern tip of Sumatra. Ninety percent of the LNG production is exported to Japan and the remainder to South Korea and Taiwan.

He also said that the project for natural gas liquefaction in Natuna, whose contract for development is now being finalized, will strengthen Indonesia position and make it the biggest gas producer and exporter.

Both Sudjana and Suyitno declined to elaborate on the results of the Natuna project deal, the report on which is expected to be submitted to President Soeharto by the minister today.

High demand

Tan Sri Datuk Azizan Zainul Abidin, president of Malaysia's Petronas, told the meeting that the demand for gas in the region will significantly jump in the future due to industrial circles' awareness of the need to limit reliance on oil and coal for environmental reasons.

"There is a growing awareness of the advantages of gas and a conscious move to increase the share of gas in the energy mix," he said, adding that Japan, South Korea and Taiwan have projected increases in their gas demands.

Japan, which imports a total of 40 million tons of LNG per year, plans to raise its imports to 62 million tons per year by 2005. "For the same period, South Korea's demand for LNG is expected to triple to 14.8 million tons per annum from the present level of 5.5 million tons," he said.

A similar trend is seen in Taiwan, he said. Taiwan will be needing around eight million tons per year, more than a threefold increase, he said.

He told the Post that Indonesia, like Malaysia, should also attract more investors to develop infrastructure for LNG distribution, considering that many neighboring countries in Asia would prefer to buy LNG through a pipeline system, instead of shipping it across the sea.

"Like LNG plants, major piped gas projects also entail huge investments," he said. (fhp)