Indonesia studies LNG export, pipeline potential

Eric Watkins
Senior Correspondent

LOS ANGELES, Jan. 16 -- Indonesian officials say they are awaiting the publication of reliable figures on the country's natural gas resources before deciding new policies governing the construction of domestic pipelines and future exports of LNG.

"I hope the preparation of the gas supply and needs projections will be completed this month," said Luluk Sumiarso, director general of the ministry of energy and mineral resources.

He told the Suara Pembaruan newspaper that the gas projections would provide information on proved gas reserves and potential demand in nine gas-producing provinces: Nanggroe Aceh Darussalam, North Sumatra, South Sumatra, Jambi, West Java, Central Java, East Java, East Kalimantan, and Papua.

Luluk said the data will be used as the basis for deciding future export policy and whether Indonesia will construct a planned 1,115-km pipeline linking East Kalimantan and Central Java.

Because of increased domestic gas demand, the government plans to cut LNG exports by 19% to Japan, South Korea, and Taiwan this year, shipping 19.4 million tonnes of LNG instead of the contracted 24 million tonnes.

State-run PT Pertamina also is negotiating the postponement or replacement by other producers of 36 cargoes from PT Badak NGL's LNG plant in Bontang, East Kalimantan and 22 from Aceh-based LNG producer PT Arun NGL.

Energy and Mineral Resources Minister Purnomo Yusgiantoro said the government might choose to transport via LNG carriers, instead of pipelines, to overcome gas shortages in Java.

The uncertainty over gas supplies has prompted PT Rekayasa Industry (Rekin) and state-owned PT Pertamina to postpone construction of a 480-km gas pipeline between Cirebon in West Java and Gresik in East Java. Rekin, a state-owned engineering company, holds the contract to build the Cirebon-Semarang section in Central Java, while Pertamina was awarded the contract for the Semarang-Gresik segment. Rekin Pres. Triharyo Indrawan Susilo said his company needs guarantees concerning the gas supplies from East Kalimantan.

However it is unclear how Luluk's remarks will affect the plans of PT Bakrie & Brothers (B&B), which won tenders from the downstream oil and gas industry regulator BPH Migas last July to build and operate the East Kalimantan-Central Java pipeline.

B&B in December said it plans to proceed with the project despite doubt voiced by officials about its feasibility (OGJ Online, Dec. 20, 2006).

While awaiting the report, Luluk Jan. 11 announced that Indonesia's gas reserves in 2006 stood at 187.1 tcf, up by 0.7% from 185.8 tcf in 2005. He said this consisted of 94 tcf of proved reserves and 93.1 tcf of potential reserves.

Indonesia's total 2006 gas production was reported as 8,104 MMscf, of which 7,137 MMscf was obtained from production-sharing contractors and 967 MMscf from Pertamina. Of the gas production, 4,365 MMscf or 53.9% was exported, while 3,739 MMscfd or 46.1% was domestic consumption.

Contact Eric Watkins at hippalus@yahoo.com.

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