RI may buy LNG from Nigeria to supply Asia

RI may buy LNG from Nigeria to supply Asia

Bloomberg, Jakarta

Indonesia's state oil company, which expects liquefied natural
gas (LNG) production from its plant on Borneo island to fall 10
percent this year, is in talks to buy cargoes from Nigeria to
ensure supplies to customers in Northeast Asia.

"We are talking to Nigeria for replacement cargoes," Ari
Soemarno, senior vice president of marketing and trading at
state- owned PT Pertamina, said in an interview last week in
Jakarta. He wouldn't say how many cargoes Pertamina plans to buy
from Nigeria.

Production from PT Badak NGL, the world's largest LNG plant at
Bontang in East Kalimantan, is falling from last year's 26
million metric tons because reserves in gas fields that supply
the plant are being depleted faster than expected. Fields run by
Vico Indonesia, a joint venture between BP Plc and Eni SpA, were
the first to supply the plant when it started up in 1977.

Asia's shortage of LNG used by power plants is driving up
prices and prompting producers in Nigeria, Trinidad and the
Middle East to redirect supply earmarked for the U.S. before the
Northern Hemisphere winter.

In the three months ended July 31, Australia, Malaysia and the
Middle East sent 13 cargoes to the U.S., totaling 740,000 metric
tons, Andy Flower, a U.K.-based independent LNG consultant, said
last week. In August, at least seven cargoes, or 350,000 tons,
were delivered from Nigeria, Trinidad and possibly Spain to
Northeast Asia, he said.

"There has been a big switch-around between the early part of
the northern summer and the last couple of months," Flower said.
Korea Gas Corp., the world's biggest LNG buyer, "and the Japanese
utilities are building stocks, which have been depleted during
the summer. If the winter is cold then they will be in the market
for more LNG."

In September, Soemarno said Pertamina bought six replacement
cargoes from Oman and Qatar to meet export orders and had talks
with buyers in Japan and South Korea about delaying deliveries.

Asia's inventories of LNG fell faster than expected after a
hotter-than-usual summer in South Korea, Japan and Taiwan caused
a surge in use of the fuel to power air-conditioners. Tokyo
Electric Power Co., Korea Gas and other Asian buyers, who may use
more than US$21 billion of LNG in 2004, have contracted for most
of the region's new output until 2007.

The LNG shortage is driving prices higher in the Asian spot
market for individual cargoes, said Park Jae Young, a manager in
the LNG trading team at Korea Gas, declining to give details.

Korea Gas paid an average of $259 a metric ton for LNG last
year and prices in the spot market rose to about $312 a ton, Lee
Keum Woo, an official in Korea Gas's fuel trading team, said in
August.