Japanese LNG buyers to extend contracts
Japanese LNG buyers to extend contracts
NUSA DUA, Bali (JP): Two of Indonesia's major liquefied
natural gas (LNG) buyers have reached an initial agreement with
Pertamina to extend their contract to buy LNG from the Arun LNG
plant in Aceh, the state-owned oil company said here on Thursday.
"We and the buyers from the eastern part of Japan have reached
the basic principles to extend the LNG-sale contract. But, we
have yet to finalize the details before striking a deal,"
Pertamina's director for general affairs Hadi Daryono said on
Thursday on the sidelines of the Indonesian International Oil and
Gas Exhibition and Conference.
He believed the deal could be signed between the end of this
year and the first quarter of next year.
Hadi said the Japanese buyers -- Tokyo Electric and Tohuku --
had indicated that they wanted to continue buying 1 million tons
of LNG from Arun annually for another five years starting from
2005.
Both companies currently buy a total of 3.5 million tons of
LNG from Arun under a long-term contract ending in 2005.
He said the Japanese buyers currently bought LNG only from
Indonesia but they had decided to buy the commodity from several
suppliers, including Malaysia, Australia and Middle East, rather
than only one supplier.
"Anyway, although their demand is decreasing, we still feel
happy in view of the fact that they still buy our LNG amid the
tighter competition in the LNG market.
Arun has six trains with a production capacity of 12.3 million
tons per year.
Aside from Arun, Indonesia has another LNG plant in Bontang,
East Kalimantan which has seven trains with a production capacity
of 18.3 million tons per year.
Pertamina has also planned to build the country's third LNG
center in Wiriagar, Irian Jaya where American company Atlantic
Richfield (ARCO) and British company British Gas had found a huge
natural gas reserve.
Indonesia is the world's largest LNG exporter controlling 43
percent of the Asia Pacific LNG market with an annual export of
28 million tons.
Hadi said the construction of the eight train of the Bontang
LNG plant -- popularly called Train H -- was expected to be
completed in November this year.
"The operation of Train H will increase production capacity of
the Bontang LNG plant to 21.64 million tons per year," he said,
adding the additional output would be bought by Taiwanese buyers.
Taiwan, Japan and South Korea are the regular buyers of LNG in
the region.
But, LNG producers in the region are currently eying market
potentials in China which has planned to replace coal with gas
for its power plants.
Hadi said Pertamina had been intensively marketing the
Wiriagar LNG to China in competition with other producers,
including Australia. (jsk)