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INDONESIA - Indonesian LNG & Pipeline Gas Exports Decline.

Indonesia in 2004 exported 25.6 million tons of LNG LNG (liquefied natural gas): see under natural gas.  to Japan, South Korea and Taiwan. In 2005 LNG exports to the three markets are likely to fall to 22.46m tons, in view of a decline in gas production and a rise in local demand. So, while Indonesia's LNG industry was spared damage from a devastating dev·as·tate  
tr.v. dev·as·tat·ed, dev·as·tat·ing, dev·as·tates
1. To lay waste; destroy.

2. To overwhelm; confound; stun: was devastated by the rude remark.
 Dec. 26 earthquake and ensuing en·sue  
intr.v. en·sued, en·su·ing, en·sues
1. To follow as a consequence or result. See Synonyms at follow.

2. To take place subsequently.
 tsunami which hit north Sumatra North Sumatra (Indonesian: Sumatera Utara) is a province of Indonesia. Its capital is Medan. Geography and population
The province of North Sumatra stretches across the island of Sumatra between the Indian Ocean and the Strait Malacca.
 and Aceh, there has been a shift from LNG exports in favour of the local fertiliser producers and the power sector.

As a result, Indonesia's reputation as a reliable LNG supplier has come into question once again. Pertamina on Jan. 18 said it had decided to delay the shipment of 51 LNG cargoes to Japan, South Korea, and Taiwan this year. The delay, which Pertamina blamed on a decline in gas output and a sudden need to reallocate Verb 1. reallocate - allocate, distribute, or apportion anew; "Congressional seats are reapportioned on the basis of census data"

allocate, apportion - distribute according to a plan or set apart for a special purpose; "I am allocating a loaf of
 gas to fertiliser producers, will cut export commitments from its Bontang plant in East Kalimantan East Kalimantan (Indonesian: Kalimantan Timur abbrv. Kaltim) is Indonesian province on the east of Borneo island. The resource-rich province has two major cities, Samarinda (the capital and a center for timber product) and Balikpapan (a petroleum center with oil  to 335 shipments and 45 from its other plant at Arun in Aceh, northern Sumatra.

Ari Soemamo, senior vice-president in charge of Pertamina's Marketing and Trading Directorate, shrugged off the delay, saying the buyers were seeking fewer LNG shipments this year. But Japanese clients were unhappy with the delays. Yasuo Ryoki, acting head of energy resources at Osaka Gas Osaka Gas Co.,Ltd. (大阪瓦斯株式会社  , said Indonesia's decision to cut export shipments undermined the importance of the company's securing of a supply commitment, which had been agreed to under a legitimate contract. Still, Ryoki was quoted as seeking a better deal for Osaka Gas due to the cutback cut·back  
1. A decrease; a curtailment: "The political effects of food cutbacks could be devastating" New York Times.

 in shipments.

"Indonesia should offer LNG prices close to the price formula for Fujian", Bisnis Indonesia Bisnis Indonesia is a daily newspaper, published in Jakarta, Indonesia. Bisnis Indonesia primarily covers Indonesian financial and business news and issues. It is published by PT Jurnalindo Aksara Grafika (PT JAG), a company founded by three conglomerate businessmen in Indonesia:  quoted Ryoki as saying. Ryoki said Indonesia had to improve management of its gas industry, explaining that it was unclear whether Pertamina or the Oil and Gas Implementing Body (BPMigas), the state's E&P regulator, had authority to deal with LNG buyers. Despite having officially accepted the delay, Osaka Gas did not want to see a repeat in the future, Ryoki said.

Osaka Gas, a long-term contract buyer from Indonesia, imports 6.4m t/y of LNG, including 1.7m t/y from Indonesia. Its contract with Pertamina will end in 2010. Aside from Osaka Gas, other affected companies include Kansai Electric Power Co., Chubu Electric Power Co., Tokyo Gas Tokyo Gas Company (東京瓦斯株式会社 Tōkyō Gasu Kabushiki-gaisha TYO: 9531 ), founded in 1885, is the primary provider of natural gas to the main cities of Tokyo, Kanagawa, Saitama, Chiba, Ibaraki, Tochigi, Gunma,  Co., and Korea Gas Corp (Kogas).

Indonesia in 2004 exported 16.3m t/y to Japan, roughly 30% of Japan's LNG imports; 5.3m t/y to South Korea, 26% of its imports; and 4m t/y to Taiwan, 63% of its imports. But Indonesia itself had to import much of that LNG for onward sale to its customers. In June 2004, Pertamina was expected to buy up to 30 LNG cargoes on the spot market in order to meet its contractual obligations because of disruptions to the domestic gas output. LNG exports in 2005 are expected to amount to 14.26m tons to Japan, 4.8m tons to South Korea and about 3.4m tons to Taiwan. It is not yet clear whether Pertamina will buy LNG from other sources in 2005 to cover contracted commitments.

Unrest in Aceh had led to lower gas deliveries and output at the Arun LNG complex, while a fire at Unocal's Attaka offshore gas field reduced deliveries to the Bontang complex in February 2004. Wood Mackenzie of Edinburgh expected Pertamina to purchase as much as 1.5m tons of LNG last year to cover existing contract shortfalls.

Indonesia by 2003 had increased gas exports in LNG form and by pipeline. Being the world's biggest supplier of LNG, now with a capacity of 36.8m t/y, there had been plans to keep its leading position and to maximise gas exports. Its ability to produce and export LNG was expected to exceed 60m t/y by 2010.

LNG has been the largest single foreign exchange earner in Indonesia, with exports in 2003 having gone 70% to Japan, 20% to South Korea and 10% to Taiwan. Bontang, on the east coast of Borneo island, consists of eight trains and there have been proposals for two more within this decade. The Arun complex consists of six trains. The nameplate capacity of Bontang is 21.2m t/y, but it can produce 27m t/y. Two of Arun's six trains have been shut down because of a fall in gas supplies from depleting fields, and the plant's capacity has been cut by 4m t/y to 9.8m t/y. There would be an LNG complex in each of: the BP-led Tangguh project in Papua with a 7.6m t/y capacity by end-2008, likely to reach 10m t/y by 2011; Pertamina-led projects to build a 5m t/y LNG plant in East Kalimantan by 2008 and one in Central Sulawesi Central Sulawesi (Sulawesi Tengah) is a province of Indonesia located in the heart of Sulawesi. It was established on April 13, 1964.

Central Sulawesi has an area of 68,033 km (26268 sq mi) 
 to have a capacity of 6m t/y by 2007/08; and ExxonMobil's East Natuna venture; but this is not likely to be realised in the near future.

Pertamina has been the signatory sig·na·to·ry  
Bound by signed agreement: the signatory parties to a contract.

n. pl. sig·na·to·ries
One that has signed a treaty or other document.
 of all Indonesian LNG sales contracts Sales Contract

Contract between a seller and buyer for the sale of goods, services, or both.
. Some of these contracts expire in 2007, 2010 and 2011. Pertamina, a limited liability company since April 2003 and to be privatised from 2006, was stripped of its role as Indonesia's only LNG marketer and seller under a new oil and gas law which came into effect in 2001. In October 2002 it proposed to the government that it be reinstated as the sole seller of the republic's LNG. In the summer of 2001, BP was authorised to market Tangguh's LNG in China. That was the first time a private company handled the marketing of Indonesian LNG; but BP failed to secure its highly sought prize, the Guangdong supply contract. Jakarta later sent a marketing team headed by a senior Pertamina official when the Tangguh project was offered the contract to supply Fujian, which will be China's second terminal. Pertamina's success in securing the $8.5 bn Fujian deal in September 2002 encouraged the company to step up its campaign for the government to reinstate To restore to a condition that has terminated or been lost; to reestablish.

To reinstate a case, for example, means to restore it to the same position it had before dismissal.
 its LNG marketing monopoly rights.

Indonesia's PSC (Public Service Commission) Same as PUC.  contractors, like BP, prefer to maintain a hands-on approach, or at least be allowed to market their own LNG jointly with Pertamina. This will remove any conflict of interests as Pertamina is promoting its own LNG ventures. It would also maintain confidence in 2001 oil and gas law (see Vol. 60, Gas Market Trends No. 11).

Floating LNG plants would make development of gas fields cheaper and quicker. Unocal, which has found major gas reserves offshore (see Gas Market Trends No. 10), has talked with Jakarta about a floating LNG plant.

Such plant can be moved to another place when the reserve is depleted de·plete  
tr.v. de·plet·ed, de·plet·ing, de·pletes
To decrease the fullness of; use up or empty out.

[Latin d
. This is cheaper than moving the natural gas from deep-sea fields to an onshore plant.
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Comment:INDONESIA - Indonesian LNG & Pipeline Gas Exports Decline.
Publication:APS Review Gas Market Trends
Geographic Code:9INDO
Date:Mar 14, 2005
Previous Article:INDONESIA - The E&P Regime.
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