Indonesia needs more investment in gas industry

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)