Pertamina and Indian Oil to discuss LNG sale deal
JAKARTA (JP): India and Indonesia have agreed to start discussing the details of the sales of liquefied natural gas (LNG) from state-owned oil and gas company Pertamina to India.
Under the terms of a memorandum of understanding (MOU) signed here on Thursday, Pertamina and the Indian Oil Corporation Ltd (IOC) will form a team to negotiate LNG deals.
"We are nominating the teams which will sit down together and work out the details to come to an agreement," IOC chairman M.A. Pathan IOC said after the signing of the agreement.
Asked on the negotiation's time frame, he said it would depend on how fast the teams could arrive at an agreement that was acceptable to both countries.
"The LNG supply contract will depend on comparable competitive landed costs," he said.
Pathan said that India planned to start importing LNG by the year 2002, and was currently finalizing an agreement to buy 7.5 million metric tons of LNG per year from Qatar.
Pertamina's president Baihaki Hakim said that the MOU did not cover a sales agreement as reported by The Jakarta Post in its Wednesday edition.
Pathan also said that the MOU contained no agreement on the quantity of LNG that Indonesia might supply, but he said India could buy more than 1.8 millions tons of Indonesian LNG as has been estimated by Pertamina, if the later could accept the Indian terms and conditions.
"I am not looking for 1.8 million tons, we have to finalize much more than that, so it is not limited to 1.8 million tons. It could be much higher," he explained.
He said that India's gas demands would grow sharply in the coming years, along with increases in fuel consumption.
Data from the IOC shows that India's gas demands would reach 151 million standard cubic meters per day (mmscmd) by 2002, 231 mmscmd by 2007, 313 mmscmd by 2012 and 391 mmscmd by 2025.
Pathan said that his country was importing some 70 percent of its oil needs, with the remaining 30 percent produced internally.
He said that oil consumption by 2002 would rise to 111 million tons (mmt) from 91 mmt in 1999. By 2007 fuel consumption would reach 148 mmt, 195 mmt by 2012 and 368 mmt by 2025, he said.
Baihaki said that Indonesia might supply LNG from the Bontang LNG plant in East Kalimantan, adding that the IOC delegation had made a visit to the plant.
The Bontang plant operates seven LNG trains and produces approximately 22 million tons of LNG per year.
Pertamina was currently designing the construction of an eighth train to anticipate growing LNG demand from abroad, Baihaki added.
Pertamina jointly operates the Bontang LNG plant with its production sharing partners Unocal Indonesia, Vico Indonesia Ltd and Total Indonesie.
Aside from LNG trade, both countries have also agreed to establish closer cooperation in the oil and gas industry.
Under the MOU, India and Indonesia will develop cooperation in the fields of exploration, production, marketing and trade of oil and gas, among others. (bkm)