RI's LNG buyers agree to shipments reduction

RI's LNG buyers agree to shipments reduction

State oil and gas company PT Pertamina said buyers in Japan, South Korea and Taiwan agreed to a reduction of 30 shipments of liquefied natural gas this year.

"The customers have agreed," said Ari Soemarno, director of marketing and trading at Pertamina, in Jakarta on Thursday. "It's still within our contracts so there won't be a breach of agreement."

The drop in LNG sales will reduce Indonesia's income from oil and gas, which the government was counting on to help narrow the country's budget deficit.

Indonesia aims to cut 30 to 35 cargoes a year from PT Badak NGL in Bontang, the bigger of the country's two LNG plants, because of production problems, Rachmat Sudibyo, chairman of industry regulator BPMigas said on Nov. 3.

Pertamina is the operator of the LNG plant, the largest in operation in the world. Soemarno declined to give the names of the buyers.

Pertamina had earlier estimated it may ship between 355 and 360 cargoes of the fuel this year. Its supply contracts allow Pertamina to cut or increase shipments to customers by 10 percent, Soemarno said earlier.

The Bontang plant faced a shortfall in gas supply last year after Unocal Corp.'s offshore Attaka field was shut for more than a week in February 2004.

The decline in output forced Pertamina to buy LNG from the spot market to meet its supply contracts.

Indonesia's LNG buyers in Japan includes Tokyo Gas Co., Japan's biggest natural gas distributor, Kansai Electric Power Co., Kyushu Electric Power Co., Osaka Gas Co., Chubu Electric Power Co., Nippon Steel Corp. and Toho Gas Co. -- Bloomberg