BP, Inpex to set aside LNG for domestic consumption

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Thursday that Anglo-American energy firm BP Plc and Japan?s oil, gas firm Inpex Corporation will soon sign MoUs with government to set aside some of their future LNG production in Indonesia for domestic users.

According to Purnomo as quoted by Kompas daily, BP would supply 1 million tonnes per annum from Tangguh LNG plant expansion, while Inpex would supply the same volume from its proposed Masela LNG plant, which will have capacity of 5MTPA. Purnomo said the supply deal would be for 20 years.

Purnomo did not specifically disclose who the consumers would be, but a consortium comprised of state gas distribution firm PGN, state electricity firm PLN and state oil, gas firm Pertamina is planning to build 3MTPA LNG receiving terminal in Bojanegara, Banten, and has secured 1.5MTPA supply commitment from Total SA through Bontang LNG plant in East Kalimantan. The terminal is slated to start production in 2011.

Meanwhile, a BPMIGAS Gas Marketing Division Head Fathor Rahman told Petromindo.Com on Friday that Tangguh capacity expansion is currently still at evaluation stage. ?There?s no firm decision yet for expansion,? he said.

He added that domestic commitment for the LNG plants are important. He, however, said that export allocation would be needed to help the projects? economics as domestic prices would be set lower than export.

BP-operated Tangguh is ready to start production early next year, but all of its 7MTPA capacity has been committed for export market. Inpex, which is currently in the process of securing PoD approval for Masela, has 14TCF of gas in the block with production expected to start in 2016. (godang)