Indonesia to have LNG excess capacity in 2011, BPMIGAS seeking buyers

Upstream oil, gas regulatory body, BPMIGAS said on Tuesday that government is seeking buyers of liquefied natural gas (LNG) in 2011 because it expects excess capacity of 2.5 to 3 million tons when an existing contract ends, the Jakarta Globe reported.

Indonesia, the world's third-biggest LNG exporter after Qatar and Malaysia, has an 8.4 million tons per year (tpy) contract due to expire in 2010 and a 3.6 million tpy deal ending in 2011, both with a group of Japanese firms.

In February 2009, six Japanese firms reached a deal in principle to extend their term contract for Indonesian LNG from 2011 for 10 years, and agreed to purchase a combined 3 million tpy of LNG from 2011 to 2015, and 2 million tpy from 2015 to 2020.

"We will seek LNG buyers for possible short-term contracts until the local LNG receiving terminal operations are ready. We don't know when the receiving terminal will be ready," Budi Indianto, the deputy head of BPMIGAS said on Tuesday.

Budi said that the LNG will be supplied from Bontang plant in East Kalimantan.

Budi said he would ask state oil and gas firm Pertamina and local gas distribution firm PT Perusahaan Gas Negara (PGN), to give clear timing for when their LNG receiving terminal will be in operation.

"We have prepared the LNG to supply the local receiving terminal but it is not clear when they will begin operation," he said.

Pertamina will build a floating receiving terminal near Jakarta, in a joint venture PGN. Pertamina will also build a receiving terminal in East Java, and PGN will build a terminal in North Sumatra. (*)