Japanese firms, Pertamina renew in LNG contracts

Japanese firms, Pertamina renew in LNG contracts

JAKARTA (JP): State-owned oil company Pertamina signed
agreements yesterday to extend two liquefied natural gas export
contracts with Japanese buyers worth a total of US$20.3 billion

The first contract, which was signed in 1973, will be extended
for 11 years starting from January, 2000, with an annual delivery
of 8.4 million tons.

The second contract, which was signed in 1981, will be
extended for eight years starting from April, 2003, with an
annual shipment of 3.6 million tons.

"The total volume of 121.7 million tons will be supplied by
Train-G, the seventh LNG production train, at the Bontang LNG
plant in East Kalimantan which will be supported by new gas
reserves discovered by Total Indonesie, Vico Indonesia and Unocal
Indonesia," Pertamina's President Faisal Abda'oe said.

Abda'oe said the seventh production train in Bontang is
scheduled to come on stream in 1997, thereby increasing the
Bontang plant's total capacity to 18 million tons a year, making
it the largest single-site plant in the world.

Pertamina currently operates six LNG trains in Bontang and
another six in Arun, Aceh, with a combined total production
capacity of over 25 million tons per year.

Abda'oe said that the first contract involves Chubu Electric,
the Kansai Electric Power Co., Kyushu Electric Co., Nippon Steel
Corp., Osaka Gas Co. Ltd. and Toho Gas Co. Ltd. as buyers.

The Japanese buyers covered by the second contract include
Chubu Electric Power, the Kansai Electric Power, Osaka Gas Co.
Ltd. and Toho Gas Co. Ltd., Asaka Gas, Toho Gas, Jilco and Nissho
Iwai.

He said Indonesia exports annually an average of 18.8 million
tons of LNG to Japan, or 45 percent of Japan's total imports, 5.6
million tons to South Korea and 1.7 million tons to Taiwan.

Besides Indonesia, the LNG suppliers to the Japanese market
also include Malaysia, Qatar, Brunei, Australia, Yemen and Oman,
he added.

Minister of Mines and Energy I.B. Sudjana, who witnessed the
contract signing, said that the extension of the LNG contracts
reflects the confidence of Japanese buyers in Indonesia, which is
now facing stronger competition from other LNG suppliers.

"This is the biggest LNG contract in the world," he said.

He added that the government may invite the Japanese buyers to
buy LNG from the Natuna gas project in the South China Sea, which
is currently under preparation for development.

The US$40 billion Natuna gas project will be developed by
Pertamina in a joint venture with Exxon Corp. of the United
States.

Sudjana noted that the Asia-Pacific region, known as the most
dynamic regional economy in the world, will depend increasingly
on energy supplies from other regions.

"It is in this context that we see the important role of the
Natuna gas project," he explained.(04)