Japan to cut down LNG import from RI by 60 percent

Indonesia will sign new LNG (liquefied natural gas) sale contracts with Japanese power producers this month. Most of them plan to cut down the gas import from Indonesia by 60 percent and to shorten the contract from 21 years to between 5-10 years, according to the Kontan economic tabloid.

The tabloid said that signs that Japan would significantly reduce its gas purchase from Indonesia were evident from a statement made by Tokyo Electric Power Co. Inc. (TEPCO), which said that it would cut down its gas purchase from Indonesia after its 21 years contract expired in 2004. TEPCO also said that a new contract to be signed this month would also be shortened to 5-10 years.

Tohoku Electric Power Co. has also issued a similar statement.

Kontan said that the declined in the Japanese gas import from Indonesia was due to various reasons including the political uncertainty in Aceh, the home base of LNG Arun, forcing Japan to search for other gas producing countries to secure its gas supply.

But the Japanese customers said that the decline in their gas purchase was due to the fact that the LNG Arun production was declining, forcing them to make adjustment.

The drop in Japan's gas import would spell trouble for Indonesia because Japan was Indonesia's largest LNG market. Indonesia exports 78 percent of its LNG production to Japan.

President of state oil and gas company Pertamina is planning to visit Japan soon.

President Abdurrahman Wahid also plans to make a stop over in Japan during his current overseas trip to urge Japan not to cut down its gas import from Indonesia.

Meanwhile, Kontan also reported that Pertamina had been trying to search other export market. One prospect was to sell gas to India. (*)