Purnomo wants Japan to continue to buy LNG

The Jakarta Post, Jakarta

Minister of Energy and Mineral Resources Purnomo Yusgiantoro has asked President Megawati Soekarnoputri to persuade Japan to continue buying liquefied natural gas (LNG) from the Bontang LNG plant in East Kalimantan during her coming visit to the country.

The request was made by Purnomo on Friday in a meeting with the President and the chief executive officer (CEO) of French firm Total, Thierry Desmarest, Antara news agency reported.

The Bontang LNG plant, which is operated by Total, among other companies, will see some of its sales contracts with several Japanese buyers, including Kansai Electric, Kyushu Electric, Nippon Steel and Tohoku and Tepco, expire in 2010. The contracts with the companies total 10.15 million tons per year.

Should the Japanese firms end the contracts, Indonesia will lose billions of dollars annually in potential revenue.

Megawati will visit Bangladesh, Mongolia, Japan and Vietnam from June 18 to June 28.

Purnomo said the President should include the extension of the LNG contracts in her talks with the Japanese government as there are worries that Japanese buyers might turn to other suppliers once the contracts expire.

Several countries, including Australia, Qatar and Russia, have been aggressively persuading the existing buyers of Bontang LNG to switch to them, offering the Japanese cheaper prices.

Later in a press conference, Desmarest said Total's commitment to Indonesia remained strong, adding that the firm had spent a total of US$1 billion in investment annually in Indonesia and would spend the same amount in the future.

Indonesia, which has two LNG plants located in Bontang and Arun respectively, is the world's largest LNG exporter with a total production capacity of 31.6 million tons.

The country's third LNG plant is being developed in a consortium led by BP Plc in the Bird's head area of Papua.

The Asia-Pacific LNG market, which has been dominated by Indonesia for decades, has turned more competitive lately following the entry of several new suppliers, such as Australia, Qatar and Russia. The oversupply in the market has provided a leverage for buyers to ask for cheaper LNG prices.