LNG export contracts can be suspended: BP Migas
Wednesday, December 7 2005 - 01:45 AM WIB
Speaking to the press on Tuesday, Haryono said that using the gas for domestic market is the number one priority in line with the oil and gas law No 22/2001. ”It means that if the country’s gas production is not enough to meet both domestic demand and export commitment, the existing export contracts could be suspended,” he said.
The country’s gas reserves are estimated to reach 24.66 trillion cubic feet, according to him. “If about 95 percent of the reserves could be produced, the total gas production could reach 23.4 trillion cubic feet,” he said. With the country’s LNG export commitment reaching 10 trillion cubic feet, the gas production which can be used for the domestic market would reach only about 13.3 trillion cubic feet.
With such assumption, the country will suffer a shortage of gas supply of about 5.3 trillion cubic feet to meet the domestic demand which is estimated to reach 18 trillion cubic feet within the next 20 years. “We, therefore, should reduce LNG export commitment, or reducing the volume of gas to be supplied to the country’s gas pipelines in order to cope with the shortage of the gas supply,” he added.
Separately, the head of the oil and gas upstream agency BP Migas, Kardaya Warnika, said that the country’s gas reserves of 24.66 trillion cubic feet were based on existing exploration. ‘The amount of the reserves can be higher if there are new findings,” he added.
Meanwhile, The president director of the state owned gas
distribution company PGN, WMP Simanjuntak also said that the government’s gas policy remained inconsistent.
In one side, the government planned to boost the use of gas in the domestic market in order to reduce the use of oil, he said. “However, in the other side, the government still regard gas as the country’s main export commodity to raise foreign exchange,” he added.
According to him, the government’s policy to consider gas as the main export commodity is no longer relevant with the current situation where the country is in dire need to lessen its dependence on oil.
At present, oil accounts for about 54.4 percent of the total energy use, while gas and coal account for 26.5 percent and 14.1 percent, respectively. In 2006, the government set to increase the use of gas to 43.3 percent in 2009, and to reduce the use of oil to 35 percent.
He said that increasing the use of gas faced many problems such as the high exploration and transportation costs because most of gas reserves were found in Papua, Kalimantan and Sumatra while most of the gas demand came from Java.
The other problem, according to him, the prices of gas in the domestic market is still too low and is not attractive enough for investors to develop new gas fields for domestic use. (godang)