More LNG supply shortage from Bontang expected

Bontang LNG plant in East Kalimantan is expected to experience more gas supply shortage this year, and as the consequence, LNG shipments to East Asian buyers will also be further reduced, according to a Petromindo source that is familiar with Bontang LNG situation.

The source said Bontang might be 14-16 cargoes short below Annual Delivery Program (ADP) agreed with buyers for this year. Under the 2006 ADP, Bontang will ship 322 cargoes of LNG, down original shipment plan of 374 cargoes.

The source said that acute gas shortage from East Kalimantan gas suppliers VICO Indonesia and Chevron had forced Bontang to stop LPG production. Only Total E&P Indonesie can exceed its gas production commitment. The source said the shortage has forced Bontang to stop LPG production and turned the gas into LNG. ?There are about 12 cargoes of LNG that can be added to Bontang LNG production by stopping LPG production,? said the source.

The source said Bontang had communicated the supply situation to its East Asian buyers, but the source fell short of saying whether Bontang would be forced to seek overseas cargoes to substitute production drop this year.

Japanese LNG buyers had expressed anger over Bontang?s inability to meet supply commitment and demanded that realistic contingency plan be drawn over the matter, as supply situation is predicted to become worse next year when gas supply from VICO is expected to fall even further.

Bontang supplies LNG to Japan, South Korea and Taiwan. (godang)