SKK Migas struggling to find buyers for Bontang?s LNG
Friday, November 14 2014 - 10:45 AM WIB
Upstream authority SKK Migas is seeking buyers for four cargoes of LNG from the Badak LNG plant in Bontang, East Kalimantan, which remain unabsorbed by the market in 2014, according to industrial source.
?The four LNG cargoes consist of two cargoes deliverable this month and two others deliverable in December,? the source told Petromindo.com.
Last September, Acting Chairman of upstream authority SKK Migas J. Widjonarko said that the government was offering to the spot market overseas a total of 11 cargoes of LNG which had been produced or will be produced by the Bontang plant until the end of this year.
The source explained that three cargoes which had been available since June and July have been sold to Tokyo Gas. Four cargoes available since August and October have not yet found buyers and have thus been carried over to 2015. Those cargoes will be offered to existing buyers next year. Besides, there are four cargoes available in November-December which have yet to find buyers.
"If the eight cargoes are still unabsorbed until the middle of next year, they will be sold to the spot market. Currently, the eight cargoes are still stored in the reservoir. The unsold LNG has resulted in high inventory levels at the Bontang LNG plant,? the source explained.
To overcome this problem, the source added, suppliers of gas to the LNG plant has been asked to curtail their gas production. Curtailment is happening today in the Mahakam block, the largest gas supplier to the LNG plant, operated by French firm Total EP Indonesie. Gas production from Mahakam, which normally reach 1.7 bcfd, has been curtailed by 577 mmscfd.
"Pertamina (state owned oil and gas firm), which has been designated as the seller of the state's gas share, also has auction the LNG on the spot market three times, but failed (to find buyers) because the price is under OE (owner estimate)," the source said.
The source said Pertamina is seeking to sell four cargoes from Bontang to a firm in the African country of Senegal. The firm is seeking permission from the government to do so.
Other problem which causes excess LNG production in Bontang plant is that state owned electricity firm PT Perusahaan Listrik Negara (PLN), which buys Bontang LNG through Nusantara Regas, the operator of FSRU West Java, has yet to decide on the number of cagoes it will absorb in 2015, despite that the government has allocated 22 cargoes for the company.
Editing by Johannes Simbolon