Indonesia plans Arun LNG supply swap to Eastern buyers with Qatari LNG

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Tuesday that Indonesia is seeking to swap an LNG supply contract from Arun LNG plant in Aceh to Japan?s Eastern Buyers with Middle Eastern LNG in order to secure gas supply for the ailing Aceh fertilizer plant PT. Pupuk Iskandar Muda (PIM).

Purnomo told reporters in Surabaya that currently Indonesia is in talks with Qatar and Oman to secure 1 million tones of LNG per year from 2007 until 2010. ?President Susilo Bambang Yudhoyono has lobbied Qatari government during his recent visit to Middle East and Qatar has given positive signal,? he said. He said that if the plan gets through, LNG supply of 1 MTPA for Japanese buyers would be delivered from Qatar.

Arun II Extension LNG contract calls for supply of 1 million tones per annum to Japanese buyers such as Eastern Buyers including Tohoku Electric and Tokyo Electric. The contract will end in 2010.

Meanwhile, BPMIGAS Chairman Kardaya Warnika told Petromindo.Com that Indonesia has notified Japanese buyers of its intention to swap LNG supply from Arun with Qatar LNG. ?But thus far, they haven?t stated their position (whether to agree or not with the proposal),? he said.

Indonesia, currently the world?s biggest LNG exporter is having difficulties to meet its supply commitment to Japan, South Korea and Taiwan from its two LNG centers, namely Arun and Bontang in East Kalimantan. Gas supply from ExxonMobil?operated gas fields in Aceh to Arun is dwindling as the reserves are declining. There are also pressures for ExxonMobil amid dwindling gas reserves to supply to PIM. Bontang is suffering from acute gas shortage as two East Kalimantan gas producers Vico Indonesia and Chevron failed to meet their gas production commitment. (alex)