Pertamina's Bontang complex to supply LNG to India
Indonesian state oil and gas firm Pertamina has reached a preliminary agreement to supply Indian Oil Co. (IOC) with 1.8 million tonnes/year of LNG from the Bontang LNG complex on the east coast of Borneo. After signing a memorandum of understanding with Pertamina last week, IOC Chairman M.A. Pathan said both companies have nominated teams to negotiate the details of the contract.
JAKARTA�Indonesian state oil and gas firm Pertamina has reached a preliminary agreement to supply Indian Oil Co. (IOC) with 1.8 million tonnes/year of LNG from the Bontang LNG complex on the east coast of Borneo.
After signing a memorandum of understanding with Pertamina last week, IOC Chairman M.A. Pathan said both companies have nominated teams to negotiate the details of the contract. He stressed that natural gas demand would grow rapidly in India, which imports 70% of its oil needs and is looking for alternate energy sources.
Pertamina Pres. and Director Baihaki Hakim says Indonesia is ready to supply any amount of LNG to India. The accord between the countries, to be confirmed within a year, would be effective by 2002-03, when India starts operating its large power and industrial plants fueled on gas imported through some of its first LNG receiving terminals.
Aiming to exploit Indonesia's estimated 160.8 tcf of potential gas reserves, Pertamina says it has made a major breakthrough in the Indian market and is preparing to bid for the first LNG supply contract to China. While the Badak plant at Bontang produces nearly 30 million tonnes/year of LNG, Pertamina is planning to develop a third LNG processing center specifically to export LNG to China. This $1.5 billion complex would be built at Tangguh in less-developed Irian Jaya, or at West Papua, as has been suggested recently.
Indonesia's first LNG plant at Arun in northern Sumatra is running out of gas reserves. Several options are being considered to bring piped gas from southern Sumatra or to turn it into a major LNG storage center, according to industry sources.
Gas as economic savior
Officials from the domestic petroleum industry, gathered at the Indonesian International Energy Conference here last week, have been trying to boost Indonesia's oil and gas exports, especially following the 1997-98 economic and political crisis. During that time, Indonesia's rupiah fell to a low of 9,400-9,500 vs. the US dollar. The government is still trying to keep the exchange rate at 7,000 rupiah per US dollar to bail out the economy.
The exchange rate stood at 2,500 rupiahs in early 1997.
Addressing the conference, Indonesian Petroleum Association Pres. William T. Fanagan said gas made up 80% of the 5 billion boe of hydrocarbons discovered in Indonesia during 1994-99. This puts more pressure on the country to seek gas markets, which are now emerging in India and China.
Indonesia exported 26.35 million tonnes of LNG last year to Japan, South Korea, and Taiwan. Pertamina's Baihaki also disclosed the company would be exporting its gas via pipeline to Malaysia and expanding its contract with Singapore for gas supplies via pipeline.
The Natuna fields in the South China Sea hold 49.7 tcf of gas, while the Badak fields in the eastern region of Borneo hold 46.2 tcf.