Pertamina asks govt to fund LNG imports

State owned oil and gas company Pertamina will not sign any commitment to buy liquefied natural gas (LNG) from overseas producers until the government agrees to finance the LNG purchase, Kompas reported on Saturday.

"We have sent a letter to State Minister of State Enterprises asking to finance the LNG purchase. But we have not yet received any reply," he said, adding that the government's commitment to finance the LNG purchase was needed because it was the government that should pay the LNG import.

Pertamina needs to import a cargo of LNG to meet its export commitment to its buyers. The shortage of the LNG supply occurs because PT ExxonMobil Oil Indonesia, the main supplier of the Arun LNG plant in Aceh, has been asked by the government to allocate part of its gas to fertilizer producers. As the result, the plant has suffered a shortage of gas supply to meet its export commitment. The plant needs at least a cargo of LNG to meet its export commitment for April.

The problem occurs because the fertilizer producers buy the gas at subsidized prices, far below the market price. The government has promised to cover the price difference but no formal commitment has been made. (*)