Pertamina urges dialog with Malaysia, Brunei on LNG sales
Pertamina urges dialog with Malaysia, Brunei on LNG sales
SINGAPORE (Reuters): Indonesia's state-run oil firm Pertamina urged on Wednesday for close dialogue with Brunei and Malaysia over sales of liquefied natural gas (LNG) in Asia and outside of the region.
Pertamina President Baihaki Hakim said the three countries, which are in the world's top six LNG exporters, may have to rethink how projects are developed to maintain a dominant role in the Asian LNG market.
Deregulation in big consumers such as Japan and South Korea, as well as increasing spot LNG sales, were altering the dynamics of the market, he said.
"The buyers, especially from Japan, Taiwan, Korea, and even China, are demanding more flexibility in terms because of deregulation in these countries and the stiff competition," Hakim told reporters on the sidelines of the 26th ASEAN Council on Petroleum meeting in Singapore.
"But we cannot deal with all their demands. Pertamina is promoting closer dialogue with Malaysia and Brunei, I think we are going to have a united approach when dealing with the dynamics we are facing in the LNG market," he said.
Hakim said buyers were unhappy with current supply terms and wanted a review take-or-pay deals and shorter timeframes for long-term deals. They also were asking for more flexibility in volumes and the number of cargoes, and also pricing mechanisms.
Indonesia was the world's biggest exporter of LNG in 1999 with Malaysia and third position and Brunei in sixth.
Hakim said one way to counter buyers' increasing demands might be for producers to take a more proactive role in developing projects by securing loans and finding transportation solutions.
Historically, buyers have dominated projects by securing project financing and arranging their own transport. Supply contracts often favoured buyers' interests because of the need to satisfy lenders, he said.
"Let the buyers just be buyers now," he said.
Hakim said Pertamina was seeing demand for spot LNG cargoes into the U.S. West Coast and also foresaw the possibility of swap deals with suppliers in the Middle East and Africa.
He said Indonesia sold nine spot cargoes last year and this was expected to grow.
President of Malaysia's Petronas, Hassan Marican, said the state-run oil firm first began spot LNG exports in 1999 and had continued to ship product abroad on a spot basis last year.
He said Petronas' cargoes had headed to Europe and the U.S. East Coast.
The company has five new LNG carriers on order and options for one more vessel.