Gas demand continues to increase but supply declines

The country?s demand for gas shows a continued increase from year to year due to the diversification of fuel use made by local companies. But the continued increase in the demand was not followed by the increase in gas production which has instead showed a continued decline in recent years, Kompas reported on Thursday.

Rachmat Sudibjo, the chairman of BPMIGAS, the government?s agency in charge of the supervision of exploration and production of gas and oil, said that the gas demand which was only about 1.75 billion standard cubic feet per day (BSCFD) a few years ago had almost doubled to 2.8 BSCFD in 2002. In the next five years, the demand is expected to further increase to 3.7 BSCFD.

He said that the high demand in some parts of the countries particularly in East Java and Aceh could not be fulfilled due to the decline in the gas production in the areas. In East Java, the demand has increased from 424 million standard cubic feet per day (MMSCFD) to about 600 MMSCFD at present while the supply has declined to 390 MMSCFD in 2002 to only 290 MMSCFD at present.

Rachmat said that sharp decline in the gas supply in East Java was caused by the depletion of the gas production in the Pagerungan gas field, the major supplier of the gas for the province.

The same thing occurred in Aceh. The larger part ExxonMobil?s gas production of about 1,200 MMSCFD in Lhokseumawe, North Aceh have been allocated for LNG production to meet export commitments. This has caused the local fertilizer producers to suffer a shortage of gas supply by 170 MMSCFD this year. In 2007, the gas production from ExxonMobil?s gas fields is expected to further decline to 800 MMSCFD

He said that the gas demand in West Java was expected to increase by 50 percent by from 276 MMSCFD in 1999 to 413 MMSCFD in 2002. The demand is expected to further grow to 1,000 MMSCFD in 2006. The gas production in the province can no longer be able to meet the demand. Rachmat hoped that the future demand in this province can be supplied from South Sumatra.

In East Kalimantan, the gas supply is still relatively safe to meet the demand of 310 MMSCFD a year. If there is no interruptions in the gas production, the supply is still be able to meet the demand.

Rachmat said that the country?s oil production also indicated a declining trend due the depletion of the oil reserves. Within the next three years, the oil reserves are expected to fall by 20 percent due to the lack of new exploration activities. At present the proven oil reserves reached only 4,150 billion barrels, falling from 5,150 billion barrels in 1999.

The decline in the reserves will further cause the fall in the oil production by about 9 percent a year during the next five years. It is estimated that the country?s oil production which reached 1.25 million barrels per day at present will fall to 830,000 bpd in 2008. (*)