Indonesia looks at Masela gas as new LNG source: Report

Indonesia, the world's biggest seller of LNG, is looking at the Masela production sharing contract (PSC) offshore near Timor Sea as a potential source for a new export terminal for the super-cooled and compressed gas, Reuters reported.

Oil Minister Purnomo Yusgiantoro said on Thursday recent operating problems at gas fields feeding the LNG export terminals at Arun in Aceh province and Bontang in East Kalimantan were temporary.

Indonesia, which has the capacity to export about 30 million tons per year of liquefied natural gas, was forced to buy three to four cargoes of LNG from Qatar and Nigeria at the end of 2003 to meet supply commitments to major customers in Japan, Taiwan and South Korea.

"We are buying gas from other countries to meet commitments. It's temporary because of operational things. We could not meet the cargo requirement during the winter," said Purnomo, referring to the peak demand period for heating in North Asia.

"In 2004, we will have a better situation because East Kalimantan gas operations will be repaired."

Purnomo said oil officials were assessing the viability of developing the Masela PSC as a new export terminal. The find, operated by Japan's INPEX Corp, lies east of Timor in the Arafuru Sea. It has estimated, but not certified, gas reserves of at least three trillion cubic feet.

INPEX earlier said gas reserves in Masela PSC was estimated to be between 4 to 7 trillion cubic feet.

The company also said that INPEX was considering to conduct more appraisal drillings to get more accurate figure.

In 2002, INPEX confirmed a large natural gas accumulation in Masela block after two appraisal wells, Abadi-2 and Abadi-3, tested a total 32.4 million cubic feet a day (MMCFD) of natural gas - or equivalent to 5,600 barrels a day of crude. (*)