Indonesia to reduce rather than halt gas exports: President

The government will reduce but not halt its exports of gas when long-term contracts expire in 2009 and 2010 in order to help lower costs for local firms, the president said Tuesday.

?After the contracts expire there will be a change in policy,? President Susilo Bambang Yudhoyono told reporters.

?There will be more gas used for the needs of domestic industries but that does not mean that the supply of gas to outside the country will be halted, only the ratio will be improved" to benefit local firms, he said.

Yudhoyono said that the bulk of the gas would go to domestic industries in Indonesia, one of the world's largest gas exporters, but he did not say what the ratio would be.

State-run power firm PT PLN and fertilizer firms are among the largest buyers of natural gas.

Most of Indonesia's long-term liquefied natural gas (LNG) supply contracts with East Asian countries, such as Japan, China, Taiwan and Korea, start expiring from 2010.

?We will continue to honor our contracts. They will not be broken before they expire because we respect international laws,? Yudhoyono said, adding the government would decide on a case-by-case basis which ones would be extended.

Yudhoyono had been quoted as saying last week that the country would halt its gas exports from 2009.

Just over half of Indonesia's domestic natural gas output was exported in 2005.

State energy firm Pertamina said last month it expected to cancel a number of LNG export shipments due to dwindling reserves. (*)