Pertamina, buyers agree to nullify some of LNG contracts

State oil and gas firm PT Pertamina, representing the government, has reached agreements with Japanese, South Korean and Taiwanese buyers to nullify some of the contracts to supply liquefied natural gas (LNG) from the Bontang plant in East Kalimantan this year, Kontan Daly reported on Friday.

 

The Bontang plant, which is the largest LNG plant in the country,  is unable to meet the contract obligations due to lower gas supplies.

 

“We actually wanted all the contracts be dropped but buyers disagreed. Only part of the contracts could be nullified,” Pertamina's Vice Presiden Iin Arifin Takhyan said in Jakarta on Friday, adding that the nullification would not result in penalty or default because the move was taken on the agreements with the buyers.

Indonesia is now seeking to reduce gas exports as it is focusing on domestic gas needs.

 

Earlier, Pertamina's President Ari H. Soemarno said Indonesia would only be able to extend sales contracts of LNG from Bontang with Japan amounting to 3 million tons per year after 2010.

 

"Based on the Gas Balance, LNG exports to Japan will only reach three million tons (after 2010),” Ari said.

 

The Gas Balance report, which was recently released by the government indicates that if Indonesia cuts LNG exports, East Kalimantan will record a gas surplus as much as 161.5 MMCFD in 2010. The surplus will increase to 1,629.6 MMCFD in 2011 and  1,256 MMCFD in 2012. (*)