RI to sell Natuna LNG in East Asia

RI to sell Natuna LNG in East Asia

JAKARTA (JP): Indonesia will sell the first five million tons per annum of its liquefied natural gas (LNG) production from its Natuna project in Riau to its traditional customers in East Asia, the president of the state oil company Pertamina says.

"We will soon send a marketing team to Japan for negotiations," Faisal Abda'oe told reporters here over the weekend.

Indonesia, the world's largest LNG exporter, currently exports about 23 million tons of LNG, most of which is destined to Japan and the remainder to South Korea and Taiwan.

"We hope we can sign long-term contracts for the sale of LNG to our traditional customers," Abda'oe said as quoted on Saturday by Antara.

Esso Natuna, a subsidiary of Exxon Corporation of the United States, has discovered huge reserves of natural gas off the Natuna islands in Riau. Esso Natuna can produce up to 45 trillion cubic feet of gas from the reserves, under a production sharing contract agreement with Pertamina.

Last November, Esso and Pertamina agreed to jointly establish LNG production plants in Natuna at a total cost of US$35 billion. The high cost of the project is caused mainly by the fact that the gas deposits at Natuna have a high content -- about 70 percent -- of carbon dioxide.

Abda'oe said that in the first stage, two LNG plants will likely be built. They are expected to start production in 1997, with Japan, South Korea and Taiwan as the main marketing targets.

"We will try to expand our LNG market to China, Thailand and India," he said.

He said 12 LNG plants will likely be built in Natuna.

"The Natuna gas fields can support the operation of eight to 12 LNG trains," he said.

Indonesia currently produces LNG from its gas fields in East Kalimantan and Aceh. The gas reserves in the Aceh fields are projected to dry up by the end of this decade. (32)