Korea Gas may drop one LNG shipment from RI: Pertamina
Leony Aurora, The Jakarta Post/Jakarta
Indonesia's major liquefied natural gas (LNG) buyer Korea Gas may drop one shipment of LNG from the country, a top executive of state oil and gas firm PT Pertamina says.
Korea and Taiwan participated in a tender to get LNG shipments from Nigeria, which Pertamina also took part in as it needs to secure gas supplies for fertilizer firms in Nanggroe Aceh Darussalam, the firm's trading and marketing director Ari Soemarno told reporters on Friday.
"It would be better for (Korea Gas) to drop one shipment from Indonesia and buy it directly from the producer (Nigeria)," Ari said.
Indonesia attempted to reschedule LNG shipments to its Asian buyers as fertilizer plants in Aceh were threatened with shut down due to a shortage of natural gas, an element vital in the production process, as its contract with ExxonMobil expired.
However, with Japan, South Korea and Taiwan refusing to delay shipments, Pertamina has been trying to get LNG shipments on the spot market to swap the contracted shipment to buyers.
The Oil and Gas Upstream Regulatory Agency's (BP Migas) deputy of marketing, finance and economy Eddy Purwanto said the shipment to be dropped would have come from PT Arun NGL, the plant located in Aceh.
"Korea Gas has indicated that it may drop one shipment," said Eddy. "Pertamina will negotiate the details."
Ari said that it was still unclear who would cover the price difference between the contracted cargo and the spot market. "BP Migas needs to discuss this," he said.
Exxon has continued to supply fertilizer producer PT Pupuk Iskandar Muda (PIM) in Aceh after its contract expired in July as the government has guaranteed to find one shipment of LNG to replace the gas.
One shipment of LNG is enough to run one plant, with a capacity of 1,700 tons per day, for between 50 and 60 days.
Amid the gas shortage, the government has allowed the Lhokseumawe-based PIM to export its products so that it can afford to pay the higher prices for gas.
However, PIM has said that it can only pay $6.55 per million British thermal unit (mmbtu) at the highest, or about $19 million per shipment. A shipment of LNG can typically be sold for around $25 million on the spot market. The government has made a commitment to cover any additional costs.
Indonesia has two LNG plants, namely PT Badak NGL in Bontang, East Kalimantan, and Arun. Falling output from the aging gas fields surrounding the plants has caused gas output to fall in recent years.