Indonesia’s LNG exports set to decline until 2007

Indonesia’s liquefied natural gas (LNG) exports has begun to decline this year due to the drop in the gas production in Aceh and East Kalimantan, the main producers of LNG in the country, Koran Tempo reported on Wednesday.

The deputy chairman of the oil and gas upstream regulatory body BP Migas, Eddy Purnama, confirmed in Jakarta on Tuesday the drop in LNG exports, saying that the downward trend in the LNG exports would continue until 2007.

Indonesia exports LNG through two LNG plants – the Arun LNG plant in Lhokseumawe, Aceh and the Badak LNG Plant in Bontang, East Kalimantan.

Next year, the the Badak LNG Plant will reduce its exports by 52 cargoes of LNG while the Arun LNG Plant will cut its LNG exports by nine cargoes. It means that the country’s LNG exports during the year will be 61 cargoes short of the initial commitment.

Ari Soemarno, Pertamina’s marketing director, said that the drop in the LNG exports will reduce the country’s foreign exchange earning by about Rp 17 trillion. Each cargo of LNG is worth about US$28 million.

The gas for the Badak LNG Plant is supplied by Chevron (formerly Unocal) and Vico which operates major gas fields in East Kalimantan. The two companies’ gas production has dropped significantly in recent years due to the depletion of the gas reserves.

Eddy said that the Badak LNG plant would get additional gas supply from new field which will be developed by Chevron in Makassar Strait, off East Kalimantan. “The development is expected to begin in 2007,” he said. (*)