Japan still needs RI?s gas, but asks for better contractual terms
Monday, September 29 2003 - 05:04 AM WIB
Japan still wants LNG from Indonesia but it indicated on Monday that Indonesia should offer better terms for LNG contracts.
Hiroyuki Isige, director general of natural resources and energy policy at Japan?s Ministry of Economy, Trade and Industry, said that as of 2002, Indonesia remained the largest LNG supplier to Japan, accounting for 17 million tons per year of Japan?s annual imports of 60 million tons.
Japan still expected Indonesia to continue its role as a reliable LNG supplier to the country, but Indonesia should offer ?economically sound terms? for the contracts in view of the declining prices of gas and power in Japan, Isige said during the fourth Indonesia-Japan Energy Roundtable.
He said power price in Japan declined from 19.23 yen per kilowatt hour in 1995 to 17.72 yen per kilowatt hour in 2001.
Meanwhile, gas price in the country dropped to 83.37 yen per 10,000 kilo calories in 2001 from 85.64 per 10,000 kilo calories.
?Japanese users get more price incentives,? he said in his presentation during the forum.
Isige predicted that the use of natural gas in Japan would significantly increase in the future for various factors including the fact that natural gas was considered environmentally friendly and supply sources of the fuel remain stable.
The problems faced by Japan?s nuclear power plants and the Kyoto protocol, which aims to reduce greenhouse emission, are other factors to boost the use of gas in Japan, he said.
Despite plans to build a pipeline for the delivery of gas from Russia to Japan, Japan?s LNG demand will keep rising.
He noted however that liberalization and deregulation had driven the prices of gas and electricity in Japan down. This, in turn, has made Japanese gas and power consumers price sensitive.
Isige headed the Japanese delegation to the forum, while Minister of Energy and Mineral Resources Purnomo Yusgiantoro headed Indonesia?s delegation.
During the forum, Djoko Harsono, head of marketing division of Indonesia?s upstream authority BP Migas said Indonesia realized that thanks to deregulation, liberalization and surplus production capacity, the Asia-Pacific LNG market had change from a seller market to a buyer market.
In such a situation, buyers now insist on better contractual terms.
?Buyers? orientation is very clear: How to get LNG with competitive price and get more flexibility (in contracts).
?To attract buyers, Indonesia LNG will propose the concept of single contract and dual or multi sources,? Djoko said.
Under this type of contract, Indonesia can supply buyers with LNG from any of the country?s LNG plants. Indonesia now has two LNG plants, respectively located in Arun, Aceh and Bontang, East Kailmantan, and plans to build two other plants in Papua and Sulawesi respectively.
BP Migas? chairman Rachmat Sudibyo said Indonesia was ready to discuss with Japanese buyers to find better contractual terms and conditions.
?We look to discuss the extension of the existing sales contracts for Japanese buyers. We?ll do our best efforts to improve the reliability of LNG supply to meet our buyers? demands. For that purpose, we?ll provide better terms and conditions and we?ll try to accommodate buyers? preferences,? Rachmat said.