Purnomo says Tangguh uncommitted gas reserves for domestic consumption

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Tuesday that the government had decided to allocate the remaining uncommitted gas reserves of Tangguh LNG project in the easternmost island of Papua to be sold to domestic market.

Purnomo said, as quoted by Detik that he had sent letter to Anglo-American energy giant BP PLC, the operator of Tangguh that project?s current uncommitted reserves of 4TCF, or about equal to 3-4 million tons of LNG per year, would be allocated to domestic market.

?Tangguh has 10 TCF or 7.5 million tons per year of gas that are already committed to Chinese, Korean and US buyers. The remaining balance is for domestic market. I therefore urge that whichever domestic company is interested to buy LNG from Tangguh to come directly to BP,? said Purnomom on sideline of a seminar on Chinese-Indonesia relationship in Jakarta.

He said that since Tangguh LNG for domestic market could be sold lower than that of export. ? The cost to domestic market would be at production costs plus a small margin,? he said.

Tangguh LNG is currently developing 8MTPA LNG plant, slated to commence production in 2008. Another plant could be built, as there are still adequate gas reserves.

PLN had earlier said that it had formally submitted request for LNG supply to BP, but thus far the progress was not known.

Indonesia, the world's LNG exporter, is facing acute shortage of natural gas supply for domestic industry and electricity plants due to poor gas infrastructure and unfavorable gas pricing system.(*)