Traditional buyers still interested in buying from Bontang

By Febry Silaban

Korean, Taiwanese, and Japanese buyers are still interested in LNG from the Bontang plant in East Kalimantan after their contracts expire in 2017 and 2020, according to upstream authority SKK Migas.

"Traditional buyers like Kogas, SPC Taiwan, and Japan LNG are still interested in buying Bontang LNG on long term contract basis. This is perhaps the plant is close to geographically and they are all old customers," Gas Commercialization Division Head of SKK Migas Arief Riyanto told Petromindo.com.

He said however Bontang LNG will be prioritized for domestic market. The LNG will be exported to traditional buyers as long as the domestic need has been satisfied.

Meanwhile, VP for LNG, Gas & Power at Gas Directorate of Pertamina Didik Sasongko Widi confirmed that the government?s policy is not to extend the existing LNG contracts of Bontang as LNG from the plant will be prioritized for domestic market.

Traditional buyers may sign new long-term contracts with Bontang provided that the gas from new fields.

"The Bontang LNG plant will also get gas from new fields in the future. Some of the gas from the new fields has been allocated for domestic market, the rest is for exports. Buyers such as Kogas and CPC can sign new contracts with Bontang plant to get LNG from the new field projects,? Didik told Petromindo.com.

Several gas field projects are now being developed or have been planned in East Kalimantan. They include the Jangkrik gas field project in Muara Bakau PSC operated by Italian firm ENI and IDD project developed by Chevron Indonesian Company. All these gas projects will supply gas to Bontang plant to be processed into LNG.

At present, Bontang LNG plant has four existing LNG contracts with buyers overseas. The contract with Japanese firm Medium-sized City Gas Company (MCGC) amounting to 0.39 mtpa expires in December this year. The Badak VI contract with CPC amounting to 1. 84 mtpa expires in December 2017. The Badak V contract with Kogas amounting to 1.02 mtpa expires in December 2017. The contract with Japanese buyers (Chubu Electric Power, Kansai Electric Power Co., Kyushu Electric Power, Nippon Steel, Osaka Gas and Tokyo Gas) amounting to 3 mtpa until 2015 and 2 mtpa until 2020.

"The existing contracts such as Badak V and VI are not going to be extended and the LNG covered by these contracts will be transferred to the domestic buyers (after the existing contracts expire). But they can sign new contacts for LNG from new field projects. The marketing can be started from now," he said.

Editing by Johannes Simbolon