Indonesia places domestic gas sales over exports

Indonesian Vice-President Jusuf Kalla, on a state visit to Japan, has reaffirmed the need for his country to prioritize its domestic gas market over exports.

Feb 3rd, 2009

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Feb. 3 -- Indonesian Vice-President Jusuf Kalla, on a state visit to Japan, has reaffirmed the need for his country to prioritize its domestic gas market over exports.

"I have spoken to the Japan Bank for International Cooperation (JBIC) that we will help Japan (meet their gas demand) as long as (the transactions) are under a win-win solution," Kalla said.

"We need gas for domestic consumption, but we also need to export gas for foreign exchange reserves," said Kalla who did not detail Indonesia's plans to export gas to Japan this year.

"We have abundant natural resources. Japan is dependent on us, particularly on energy," said Kalla, who hinted that Japan, via JBIC, would increase funding to Indonesia if it could secure gas supplies.

Kalla also said, "It is better for Japan to put its money into Indonesia" than to invest it domestically. Kulla explained that, "domestically, Japan will receive interest of only 0.1%, while it will get a 3% return from lending money to us."

The Indonesian government recently urged gas producers in the country to maintain production or produce more gas to meet rising demand from domestic and overseas markets.

Earlier, Indonesia's acting coordinating minister for the economy Sri Mulyani Indrawati said the government has put higher priority on the domestic market than on exports (OGJ Online, Jan.25, 2009).

Contact Eric Watkins at hippalus@yahoo.com.

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