Pertamina unlikely to import LNG from Middle East as price rises

State oil and gas company PT Pertamina said it is unlikely to import liquefied natural gas (LNG) to meet rising domestic demand as LNG price increases to US$18 per MMBTU.

?Therefore, Pertamina calls on the government to utilize domestic market obligation (DMO) which has not been met by a number of production sharing contractors (PSCs),? Pertamina said in a press statement Thursday. DMO is an obligation of PSC to allocate certain level of their LNG output for domestic market.

Pertamina said Indonesia needs LNG of 10 million metric tones per annum (MTA) beginning from 2013.

It said the price of LNG at present is hovering at the range of 15%-20% above Japan Cocktail Crude (JCC) or at between $16.5-$22 per MMBTU. According to Pertamina, as an LNG producer, this high LNG price should encourage the government to renegotiate LNG contracts with a number of buyers of Indonesia?s LNG.

?The policy to utilize locally produced LNG for domestic market needs is really urgent as it can provide larger benefits to Indonesia and create multiplier effects for Indonesia?s economic growth,? it said.

To support distribution of LNG for domestic market, including for state electricity PT PLN power plants need, pertamina and PT Perusahaan Gas Negara Tbk (PGN) are finalizing the construction of floating storage regasificaton unit (FSRU) at Jakarta bay with capacity of 3 million MTA. The government expects the FSRU to begin operating in March 2012.

In addition, Pertamina is also preparing the development of LNG receiving terminal in Central Java with capacity of 3 million MTA, which is expected to begin operating in the first quarter 2013. The gas from the receiving terminal will be delivered to buyers via Java Pipeline Project, which is being constructed by PT Pertamina Gas (Pertagas).

In the first stage, the construction of the 250-km Semarang-Gresik pipeline will begin in early 2012 and expected to come on stream in 2013.

Pertamina will also constructing mini LNG receiving terminals in cooperation with PLN in eastern Indonesian towns of Tanjung Batu, Batakan, Balikpapan, Semberah, Bali, Pomala, Jeneponto, Tello, Minahasa and Halmahera with combined capacity of 1 million MTA. These mini LNG receiving terminals are scheduled to commence operation in the third quarter 2013. (godang/giok/edi)