Japanese LNG buyers disappointed over supply problem: Pertamina
Wednesday, February 22 2006 - 09:31 AM WIB
?Japanese buyers which I recently meet with are very disappointed over Indonesia?s inability to meet supply commitment, especially customers who are heavily depended on Indonesian supply like Osaka Gas,? said Ari. Ari said Bontang LNG has cut 52 cargoes of LNG this year to its East Asian buyers including Japan buyers from original 374 cargoes, while Arun will cut 9 cargoes out of 71 cargoes originally planned.
He warned that Bontang might not be able to supply the 322 cargoes scheduled to be delivered this year due to gas supply shortage from two of East Kalimantan gas suppliers; Chevron and VICO Indonesia. ?I even doubt that Arun would be able to deliver 62 cargoes this year as ExxonMobil?s gas supply is also on declining mode.
Arun and Bontang export all its LNG production to Japan, South Korea and Taiwan with Japan as biggest offtaker.
He also said that the Japanese buyers which are currently negotiating to extend 6MTPA of Bontang contracts, which will expire in 2010, expressed disappointment over Indonesia?s inability to guarantee the above volume, due to insufficient gas supply from Chevron. Chevron thus far, reportedly, is only able to guarantee 2 MTPA supply for the contract extension while VICO?s reserves will deplete by 2010. Only Total E&P is able to meet commitment of 3MTPA gas supply.
An industry source told Petromindo.com that Japanese buyers are demanding that Indonesia prepare contingency plan to provide substitute cargoes, which is difficult to be carried out due to tight supply of LNG globally and soaring LNG spot prices.
The source also said that Japanese buyers are even more worried about the 2007 supply situation, as they predicted that in 2007 gas supply from East Kalimantan producers would be dwindling even more.
?This will tarnish Indonesian image as reliable LNG supplier and would force our East Asian customers to seek for new sources outside Indonesia,? he said. The source blamed Indonesia?s lousy management in handling the LNG industry, especially since BPMIGAS took over upstream management from Pertamina after the enactment of new Oil and Gas Law in 2001. Pertamina remains as LNG seller for Bontang and Arun, but has no power to control gas producers. ?BPMIGAS should be able to see this kind problems would occur two or three years before, but it is not able to push East Kalimantan producers to speed up development of new gas fields to meet LNG supply requirement,? said the source.
Indonesia is currently the world?s top LNG exporter, but the position would be taken over by new LNG powerhouses such as Australia and Qatar. (godang)