Vico, Total to cut gas supplies to Bontang LNG plant

By Bernard Loebs

Total E&P Indonesie (TEPI) and Vico are going to cut their gas supplies to the Bontang LNG plant in East Kalimantan as they plan to lower production due to the oil price drops and because their contracts are close to expiry, according to an industrial source.

Bontang LNG plant gets most of its gas supplies from Mahakam block operated by TEPI and Sanga-Sanga block operated by Vico. TEPI?s contract on Mahakam expires in 2017, while Vico?s contract on Sanga-Sanga is due in 2018. The government has decided not to extend their contracts.

As a result of the supply cut, Bontang will only receive 1,400 mmscfd of gas this year, compared to 1,600 mmscfd las year. In 2017, the supply is expected to fall further, the source said.

The source said that TEPI, the largest gas supplier to Bontang, was reluctant to maintain its production at last year?s level despite a guarantee from the Indonesian government that it will get a return on its investment once the contract has ended.

Editing by Johannes Simbolon