Purnomo says Indonesia not rushing to settle LNG contract extension with Japan
Thursday, May 18 2006 - 07:27 AM WIB
?There?s still plenty of time (before 2010) and right now we?re prioritizing to fix gas supply problems in East Kalimantan,? Purnomo told reporters.
Japanese new ambassador to Indonesia Shin Ebihara during a meeting with Vice President Jusuf Kalla Wednesday requested that Indonesian government to help settle protracted negotiations over contract extensions for the supply of LNG to Japanese customers.
Some 12 MTPA of LNG contracts with Japanese buyers with Bontang LNG in East Kalimantan is due to expire in 2010, and Japanese buyers, facing with global LNG supply scarcity, are eager to seal contract extension. However, the government had earlier indicated that Indonesia would only be willing to extend up to 6 MTPA as the government is mulling to designate the other half of the volume to meet domestic market demand.
The Indonesian government has announced a new policy of prioritizing gas supplies for the domestic market, with the government planning to build inter-island pipelines to channel the gas to Java where demand is rising.
To make the matter worse, East Kalimantan gas suppliers, especially Chevron and VICO Indonesia, were unable to meet their gas supply volume to Bontang LNG plant due to gas reserves decline and lack of new gas field development. Only Total Indonesie, a unit of French giant Total SA could meet their budgeted gas production from Mahakam PSC. (godang)