Pertamina questions funds for LNG cargo

Leony Aurora , The Jakarta Post, Jakarta

State oil and gas firm PT Pertamina has questioned the amount of funds being made available to buy a shipment of liquefied natural gas (LNG) to supply PT Pupuk Iskandar Muda's (PIM) fertilizer plants in Nanggroe Aceh Darussalam over the following months.

The company's director for trading and marketing Ari Soemarno said the finance ministry had disbursed US$16 million and PIM was ready with another $7 million, or $23 million in total.

"A cargo of LNG costs about $27 million on the spot market," said Ari on Monday.

He further said that Pertamina was still trying to find the much-needed LNG in the market. "We're in negotiations with Qatar, Oman," he said, naming a few other potential suppliers.

"If we find one, but we don't have enough money to pay for it, then we'll have to let it go," he added.

Last month, Pertamina's deal with Oman for a shipment of LNG went sour as the government could not provide the funds for the purchase in time.

PIM will be in dire need of gas when its contract with ExxonMobil Indonesia for $2.30 per million British thermal units (mmbtu) of gas expires by the end of this month.

Amid the LNG shortage, the government has allowed the Lhokseumawe-based fertilizer producer to export its products so that it can afford to pay higher prices for the gas.

However, PIM has said that it was only able to pay up to $3.50 per mmbtu of gas, about half the price in the global market.

Ari said Pertamina estimated that it would be easier to get LNG shipments with the coming of summer, meaning less energy will be needed in Japan, the world's largest LNG importer.

"It turns out that the competition is very tight," he said.

Indonesia has two LNG plants, namely PT Badak NGL in Bontang, East Kalimantan, and PT Arun NGL in Aceh. Falling output from the aging gas fields surrounding the plants have caused lower output in recent years.