Producers oppose govt's plan to cut gas exports

Indonesian gas producers and some analysts have opposed the government's plan to cut liquefied natural gas (LNG) exports, saying that the change in the gas policy would not only discourage foreign investors from developing untapped gas fields but would also reduce the country's foreign exchange earnings, Investor Daily reported on Wednesday.

The chairman of the association of the Indonesian Petroleum Association (IPA), Chris Newton, said in Jakarta on Tuesday that although the plan was in line with the government's policy to increase the use of gas for domestic market, it could significantly reduce the foreign exchange receipts.

Senior oil and gas analyst Kurtubi said that the government should instead encourage development of new oil gas fields in order to meet the surge in the gas demand at home, rather than cutting the gas exports.

He said the government should boost exploration activities in Indonesia's untapped gas fields which are estimated to have 350 trillion cubic feet of proven oil reserves or about 150 tcf of probably reserves in order to meet the surge in the gas demand at home.

Separately, the president director of PT Exploration Think Thank Indonesia (ETTI), Andang Bachtiar said that the plan to cut the LNG exports would cause a loss of opportunity for producers wanting to take advantage of higher prices in overseas market.

"The policy will certainly promote the use of gas at home, but in other side, gas producers can not take the advantage of higher gas prices overseas," he added.

The government has said that it would no longer extend the existing LNG export contracts as part of its plan to use the existing gas production for the domestic market. However, President Susilo Bambang Yudhoyono said Tuesday that not all gas exports would be halted. "We will see it case by case. Not all gas exports would be exported," he added. (*)