Indonesia to cut LNG exports by 10% next year
Leony Aurora, The Jakarta Post/Jakarta
Indonesia will reduce liquefied natural gas (LNG) exports by 10 percent next year due to lower production in the aging gas fields in Kalimantan and Aceh.
Buyers in South Korea, Taiwan and Japan have agreed to cut supply from the Bontang plant in East Kalimantan by 30 shipments -- equivalent to 1.8 million metric ton of LNG -- from the ordered 370 shipments, Upstream Oil and Gas Regulatory Agency's (BP Migas) deputy of marketing and finance Eddy Purwanto said.
"We are also trying to get nine shipments (of some 580,000 metric tons of LNG) adjusted from the shipments from Arun," said Eddy on Friday, referring to the smaller LNG plant located in Nanggroe Aceh Darussalam.
Arun was supposed to export some 75 shipments of LNG, he added.
Even with the reduced volume, Indonesia might lack between five to eight shipments to meet remaining orders, said Eddy.
LNG production is on the decline in the country as reserves in the gas fields, which have been operating for decades, are now becoming depleted.
Arun is supplied by ExxonMobil Oil Indonesia, which operates the gas field in Aceh. PT Badak NGL in Bontang receives gas from Unocal, Vico, and Total, the operators of a huge gas reserve there.
The government has been trying to reduce or reschedule LNG exports, particularly as fertilizer plants in Aceh have been forced to shut down due to lack of natural gas, a vital raw material for the industry.
Indonesia may only be able to offer as much as 6 million metric tons of LNG per year -- half of its current contract -- to Japan after its contract expires in 2010, said Eddy.
"The customers are requesting more shipments, but we won't be able to meet them.
"We are seeing quite a significant decline (in gas supply), while the new reserves discovered are not as big as we expected them to be," said Eddy.
The government may also give priority to domestic needs, particularly amid soaring oil prices, to provide LNG for state power firm PT PLN's planned receiving terminal in West Java, which is expected to start operating in 2008.
The government is also planning to put up for tender a pipeline project to connect gas-rich Kalimantan and densely- populated Java, where the use of the environmentally-friendly fuel has been hampered due to lack of supporting infrastructure.
Analysts have warned that there may not be enough gas reserves to supply the pipeline, which will span 1,200 kilometers from East Kalimantan to Central Java and is estimated to cost US$1.2 billion.
Indonesia, with gas reserves of 188.34 trillion standard cubic feet, has one of the most extensive reserves in the world.