Indonesia's domestic gas needs remain top priority

Indonesian Vice-President Jusuf Kalla said his country will remain "consistent" in honoring current natural gas supply contracts with Japan, but that its top priority will be to meet domestic needs.

Eric Watkins
Senior Correspondent

LOS ANGELES, Aug. 21 -- Indonesian Vice-President Jusuf Kalla said his country will remain "consistent" in honoring current natural gas supply contracts with Japan, but that its top priority will be to meet domestic needs.

After meeting Aug. 20 with Japanese Prime Minister Shinzo Abe, currently on a state visit to Indonesia, Kalla said his country wants to increase energy exports, including to Japan, as the country needs more export earnings.

To enable greater export potential, Kalla said improvements in the efficiency of domestic gas use will be made, while exploration will be expanded to increase the production of oil and gas. Kalla said exploration is already under way in Java, Papua, and the Natuna islands.

Meanwhile, according to Energy and Mineral Resources Minister Purnomo Yusgiantoro, there was no discussion between Abe and Kalla about any extensions of current LNG supply contracts with Japan.

For some time now, Indonesia has had rising domestic demand for gas. As a result, it has been diverting supplies earmarked for export to domestic users. It has also sought to renegotiate supply contracts in an effort to increase earnings.

In June Indonesia said it was reallocating supplies of Tangguh LNG originally earmarked for Sempra Energy LNG in order to boost the amounts available to state-owned utility Perusahaan Listrik Negara (OGJ Online, June 18, 2007).

In March, in an effort to obtain higher prices for its LNG exported from Tangguh in Papua New Guinea, Indonesia said it wanted to renegotiate LNG contract terms with South Korea (OGJ Online, Mar. 6, 2007).

Contact Eric Watkins at hippalus@yahoo.com.

More in General Interest