Indonesia to boost gas output to offset deficit

Indonesia expects a natural gas production shortage of some 300 MMscf for 2007 and must increase production to meet its projected demand of 8.7 bcf, said Energy and Mineral Resources Minister Purnomo Yusgiantoro during a meeting with members of the country's House of Parliament.

Eric Watkins
Senior Correspondent

LOS ANGELES, Mar. 7 -- Indonesia expects a natural gas production shortage of some 300 MMscf for 2007 and must increase production to meet its projected demand of 8.7 bcf, said Energy and Mineral Resources Minister Purnomo Yusgiantoro during a meeting with members of the country's House of Parliament.

However, he said the country has no plans to terminate existing natural gas export contracts

Luluk Sumiarso, director general for oil and gas at the Ministry of Energy and Mineral Resources said Indonesia has sufficient reserves of gas to meet domestic needs as well as export contracts but he did not explain how the country would service the projected shortfall.

Luluk spoke in reference to forecasts of Indonesia's long-term gas supply and needs, a "gas balance" drawn up by the government to help determine its future export policy. According to Purnomo, the national gas balance for 2007 shows a supply of 8.4 bcf, and demand of 8.7 bcf, creating the deficit.

Last year Indonesia produced a total of 8.217 bcf, of which about 54% was exported, with the remaining 46% sold on the domestic market.

But a shortage of gas due to declining output in 2006 prevented the government from fully meeting its export commitments to overseas buyers, while this year the government has already cut LNG exports by 19% to Japan, South Korea, and Taiwan.

It will not export gas to neighboring Malaysia and Singapore beyond current contracts, because of its need to meet rising domestic demand (OGJ Online, Mar. 1, 2007).

During the meeting in parliament, the government announced a number of moves to deal with the problem, including incentives to boost production from existing fields and accelerate the development of new onshore and offshore fields.

Purnomo, who provided no details of the proposed incentives, said there is no other way forward for the country except to increase production of natural gas in the near future.

The government has set a goal increasing gas output by 30% by 2009.

Contact Eric Watkins at hippalus@yahoo.com.

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