Purnomo: Third train of Tangguh project possible
Friday, June 3 2005 - 12:58 AM WIB
"We (the government) are assessing the market and studying the possibility of building a No. 3 train," Purnomo said.
BP, the Tangguh project's operator, and the other partners are pushing ahead with the US$6 billion project to build a 7.6-milllion-metric-ton-a-year LNG plant comprising two trains, with commercial production set to begin in late 2008.
BP and the other project partners have said they have agreed to supply 2.6 million tons a year of LNG from the Tangguh plant to China, 1.35 million tons a year to South Korea and 3.7 million tons a year to Mexico.
"It depends on the market...If there is a market for more supply, we can support that (construction of a third train)," Purnomo said.
Indonesia - the largest natural gas producer in the Asia-Pacific region and the world's largest exporter - has been forced to import LNG for the past several years due mainly to production problems at some of its gas fields and rising domestic demand.
"We have explored two new gas fields, and we are producing now, in total, 8 billion cubic feet a day of natural gas," said Purnomo, adding he is confident that Indonesia will remain the largest LNG exporter to Japan.
Nevertheless, Indonesia this year notified several of its Japanese buyers that it wouldn't be able to fully meet the import volumes they requested this year.
Energy analysts have said Japan's imports from Indonesia are expected to decline steadily in the years ahead, as Japanese power and gas utilities have begun diversifying their LNG import sources and have clinched supply deals with other producers such as Russia's Sakhalin Energy Investment Co., the operator of the Sakhalin-2 project.
In 2010 and 2011, many of Indonesia's long-term LNG supply contracts with Japanese buyers will expire, with total expiring contractual volumes of 12 million tons a year, said Purnomo.
Indonesia exported 15.5 million tons of LNG to Japan in fiscal 2004 ended March, meaning the country accounts for the largest share, or 27%, of Japan's overall imports totaling 58 million tons.
Other oil and gas producing nations including Oman, Iran and Qatar have invested to boost their LNG production to capitalize on an expected rise in natural gas demand from Asia and North America in the long term.
"We are holding discussions with the Japanese buyers" on renewing the contracts, Purnomo said.
"Japan is our longtime customer...we are flexible with our supply contracts in (terms of) prices and cargo delivery.".(*)