Govt to ban gas export until domestic requirement satisfied

The government would not approve of any new gas export contracts until domestic requirement has already been satisfied, Vice President Jusuf Kalla said on Wedneday.

Kalla has again insisted that all gas production from new fields including the Donggi-Senoro gas fields in Sulawesi should be used to fulfill demand in the domestic market to ensure local industries would have sufficient gas supply for their operations.

Speaking to the press after a meeting on the country?s "gas balance sheet" at his office, Kalla said that gas from new fields could be exported only if the domestic demand has been fulfilled.

?The development of the Donggi-Senoro liquefied natural gas (LNG) plant should be aimed at fulfilling the gas demand in the country. If there is a shortage of the gas supply in the domestic market, the LNG from Donggi-Senoro should also be used to supply the domestic market,? he was quoted as saying by Kompas.

However, Kalla said that the government would still honor all existing gas exports contract with foreign buyers. ?We will honor the existing (export) contracts, but the new production should be used to cope with the gas shortage at home. We don?t want local industries to shut down, and PLN (state electricity company) is forced to use diesel oil due to the lack of gas supply,? he added.

On the agreement made by developers of the Donggi-Senoro LNG plant to export the LNG production to Japan, Kalla stressed that all gas producers, whoever they are, should put a priority on the domestic market.

?Gas producers must sell their gas on the domestic market with prices similar to those in international market,? he said.

Kalla said that the construction of an LNG receiving terminal in Jakarta and Medan should be completed in a year so that gas from the Donggi-Senoro LNG plant could be shipped through the two LNG terminals to meet the gas needs of industries in the areas.

A consortium of PT Medco Energi Internasional, PT Pertamina and Mitsubishi Corp. plan to build an LNG plant to process the gas production from the Donggi-Senoro fields. The consortium has signed an agreement to export of the LNG production to Japan. (*)