Pertamina and Indian Oil to discuss LNG sale deal
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)