Japan pushes Indonesia to take clear stance on LNG exports
Half of Indonesian gas for domestic needs, half for exports: SBY
Tuesday, January 16 2007 - 07:38 AM WIB
Yasuhiro Yashima, fossil fuel executive officer of Japan?s energy firm The Kansai Electric Power Co Inc, said during the Indogas 2007 Conference in Jakarta that Indonesia, represented by state owned oil and gas company PT Pertamina, had reached a key commercial agreement with a consortium of six Japanese companies in September 2005 to extend some of LNG sales and purchase contracts totaling at least 6 million tons per annum (MTPA) after they expire in 2010 and 2011.
The consortium also known as ?Western Buyers? comprising Kansai Electric, Osaka Gas Co., Chubu Electric Power Co., Kyushu Electric Co., Toho Gas Co. and Nippon Steel Corp., has two contracts with Pertamina for the supply of 12 million tons per annum (MTPA) of LNG from the Bontang LNG plant that are due in 2010 and 2011.
?Fifteen months have passed but there is no agreement and our discussion with Indonesia has been in impasse. Candidly speaking, Western Buyers have never experienced impasse of this kind and we are seriously concerned,? Yashima said.
Indonesia has showed reluctance to extend some LNG sales and purchase contracts with foreign buyers since the country?s natural gas reserves have dwindled and domestic demand for the commodity has been on the rise over the past several years.
Yashima said the Japanese consortium understood that Indonesia would not be able to extend the whole amount of the contracts but he called on Indonesia to respect the agreement that had been reached by the consortium and Pertamina back in September 2005.
He noted that during his visit to Japan in November last year, Indonesia?s President Susilo Bambang Yudhoyono and Japanese Prime Minister Shinzo Abe agreed that a continued LNG trading between Indonesia and Japan was an important element in a continued economic relationship between both countries.
They also agreed that Indonesia has to honor its contract with Japanese buyers, according to Yashima.
Following the visit to Japan, several governmental officials said Indonesia would first study a ?gas balance? that would indicate the available gas reserves in the country and domestic actual and future demands. Based on the gas balance, the government will decide how much Indonesia will export its natural gas.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Monday that the government has finished drafting the gas balance and would soon discuss it in the Cabinet meeting.
President Susilo said during the conference that Indonesia will allocate 50 percent of the gas reserves for domestic demand and export the remaining 50 percent.
It is still unclear however whether, based on the gas balance, Indonesia will be able to fulfill the needs of the Western Buyers consortium
?We sincerely hope that Indonesia will be able to clear its stance on continued LNG export to Japan as soon as possible so that Indonesia and Western Buyers will be able to finalize our contract extension discussion very soon,? Yashima said. (Alex)