Mitsubishi predicts lower future sales for Indonesian LNG

The changing trend that is shifting to buyers? favor in liquefied natural gas industry will eventually lead to lower volumes in Indonesian liquefied natural gas (LNG ) new sales contract, according to Mitsubishi Corp. executive.

?As the market is now in buyer?s favor, they will look for more flexibility in off take volume, multiple commitment, optional volume with discount incentive, and security of supply,? Seiji Kato, Mitsubishi Corp's natural gas business division deputy chief operating officer, told a seminar in Jakarta Thursday.

He said that Indonesia could not expect to retain the sales volume contract and the long period commitment that it used to have.

?In buyers? perspective, Indonesia is still considered as an important LNG source, however, due to their effort to secure supply, they will tend to buy in smaller volume and thereby spread the security risk,? Kato said.

He added that the new contract signed would tend to be in combination of long-term and short-term commitment.

?This kind of contract would enable LNG producer to retain financial feasibility while buyers at the same time will be able to periodically review their LNG needs and making necessary adjustment. It would enable them to periodically, let?s say every three or four years to increase or to reduce the LNG supply in line with their growth,? he told petromindo.com. on the sidelines of the seminar.

Indonesia is currently the world?s largest LNG producer, catering for Japan, Korea and Taiwan from LNG plants in Aceh and Bontang, East Kalimantan. It expects to add one more LNG center in Tangguh, Irian Jaya, in 2005.

The country is facing stiff competition from other LNG producers such as Australia, Qatar, Malaysia and Brunei. (alex)