Pertamina to buy LNG as rescheduling fails
Leony Aurora, The Jakarta Post, Jakarta
State oil and gas firm Pertamina is in negotiations to buy 125,000 metric tons of liquefied natural gas (LNG) to meet its commitments to buyers in Japan, Taiwan and South Korea.
Representatives from those countries, earlier rejected Pertamina's request for a grace period as winter weather has dragged on in those countries, meaning they require more LNG for heating.
The company's trading and marketing director, Ari Soemarno, told reporters on Monday that it would buy the 125,000 tons from "a Middle East country" on the spot market, but gave no further details.
"We need one shipment for April," he said. Pertamina put all its eggs in one basket, relying on the hope that they could reschedule eight more shipments this year.
"We'll have to renegotiate (the shipment) with the buyers," said Soemarno.
It is unclear how the extra LNG, which is estimated to cost between US$12 million and $13 million, will be funded. The prices on the spot market are usually higher than contract prices agreed upon by Pertamina and its buyers.
The government decided to delay the export of nine shipments from PT Arun LNG to its main foreign clients for 2004 as it wanted to reallocate some of its gas output to fertilizer producers, particularly in tsunami-stricken Aceh province.
The fertilizer factories there have been struggling to maintain production due to a dwindling supply, their main fuel. Malaysia, Thailand and Singapore had earlier decided to sell their shares in the province's ASEAN Aceh Fertilizer plant, which was closed down last October due to shortages.
Separately, vice chairman of Oil and Gas Implementing Body (BP Migas) Kardaya Warnika said that, should buyers continue to refuse to reschedule shipments, the rest of the shipments this year would probably be supplied from the Bontang field in East Kalimantan.
In total, Indonesia plans to reschedule 51 shipments of LNG this year, of which 42 are from Bontang, the larger of the two currently online LNG plants in the country.
Arun is supplied by ExxonMobil Oil Indonesia, which operates the gas field in Aceh. PT Badak LNG in Bontang receives gas from Unocal and Total, the operators of a huge gas reserve there.
However, as the fields have been operating for decades, output has started to decline.
Another huge reserve has been found in the Tangguh field in Papua, which will be operated by Anglo-American giant BP. The construction of the plant at Tangguh has not yet begun.
Indonesia has the largest number of natural gas reserves in the world with 188.34 trillion standard cubic feet.