Indonesia to allocate 46 mil mt LNG to domestic market over 2013-2025
Jakarta (Platts)--7Feb2013/521 am EST/1021 GMT
Indonesia is planning to allocate a minimum 46 million mt of LNG over
2013-2025 to its planned floating storage and regasification units, which is
expected to curb the country's LNG exports, a senior energy ministry official
told Platts Thursday.
According to Edy Hermantoro, the newly appointed oil and gas director
general at the Energy and Mines Ministry, the government has allocated 27 LNG
cargoes/year to Pertamina and PGN's West Java FSRU over 2013-2025 -- the
country's first which came online in 2012 -- while Pertamina's Arun LNG plant
which is being converted into a 400,000 Mcf/d gas receiving and regasification
terminal has been allocated eight LNG cargoes in 2015 and 16 cargoes/year
Pertamina's planned FSRU in central Java will receive eight LNG cargoes
in 2015, 16 cargoes/year over 2016-2018, 22 cargoes over 2019-2022, 16
cargoes in 2023 and eight cargoes over 2024-2025. Meanwhile, PGN's 3 million
mt/year FSRU project in Lampung will receive 10 cargoes/year over 2015-2025,
One cargo of LNG typically contains 125,000 cu meters, or 57,500 mt.
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However, Hermantoro told Platts Thursday that the actual domestic LNG
allocation would depend on when the FSRUs come onstream as well as the price
that domestic buyers can pay.
"The point of the LNG allocation is that the government prioritize
domestic needs. But surely the economic value [of the project has] to be met"
Meanwhile, an official with SKK Migas, Indonesia's temporary upstream
task force, told Platts Thursday that despite growing domestic gas demand,
existing LNG export contracts will not be affected.
"We will honor our existing LNG contracts. We will not cut it even
though our domestic LNG needs surge. But in the future, the government should
meet its domestic demand, which means we will not be able to export gas/LNG
output entirely like previously."
The domestic LNG allocations over 2013-2025 do not take into account
Pertamina and PLN's planned eight mini LNG receiving terminals in the eastern
part of Indonesia which will have a total capacity of 1 million mt/year, and
were originally scheduled to come online in Q3 2013.
When contacted, Pertamina's vice president for LNG projects, Daniel
Purba, said Thursday: "We have started one among the eight mini LNG receiving
terminals. We are carrying out front end and engineering design [for one] in
Bali with a capacity about 30,000 Mcf/d. We estimate it will be onstream in
2014. We expect to get supply from Mahakam."
The Mahakam block, operated by Total and Inpex, is located offshore East
Kalimantan and supplies gas to the Bontang LNG plant in East Kalimantan.
The Energy and Mines Ministry has said it wants at least seven FRSUs
built across Indonesia to meet growing gas demand.
The country's current energy demand of about 3 million b/d of oil
equivalent is expected to surge to 8.5 million boe/d in 2025, Platts has
reported. The proportion of gas in the country's total energy mix, meanwhile,
is expected to rise to 30% in 2025, from 20.1% in 2010, as the government
looks to cut its oil dependency from 49.7% in 2010 to 20% in 2025.
Indonesia, once a top LNG supplier to the world, has for the last few
years been struggling with an appropriate policy that would strike the right
balance between exports and domestic allocation. While the country may like
to keep as much gas for domestic use as possible, the reality is that it
needs the revenue generated from LNG exports. Though the government has
gradually been raising domestic gas prices, they are still a far cry from
SOME UPSTREAM CONTRACTS RENEGOTIATED, SAYS MINISTER
More recently, the need to cater to growing domestic gas demand has
forced the government to renegotiate with upstream operators in the country,
Energy and Mines Minister Jero Wacik said at a press conference late
"The increasing gas demand has forced the government to renegotiate with
contractors. We have asked them to cut the export volume and increase the
domestic supply," Wacik said, without providing details.
There are at least two upstream gas projects, which will allocate 40% of
output to the domestic market, higher than the 25% requirement under the
country's oil and gas law enacted in 2001.
Platts reported last week, that Indonesia's SKK Migas had approved
Italian Eni's development plan of the Jangkrik North East offshore gas field
in the Muara Bakau block, which is scheduled to come online by 2015. About
40% of production from the field will be dedicated for domestic buyers at a
price at $9/MMBtu.
Meanwhile, in December 2012, SKK Migas approved BP's plan to build the
3.8 million mt/year Tangguh LNG Train 3 in Papua, which will see 40% of
output going to the domestic market.
According to Wacik, gas from the Jangkrik and Jangkrik Northeast fields
in the Makassar Strait -- which are operated by Eni -- will result in 14 LNG
cargoes going to the domestic market in 2016; 18 cargoes/year over 2017-2022,
seven cargoes in 2023 and four LNG cargoes over 2024-2025. Gas from the
fields will be processed at the Bontang LNG plant.
Meanwhile US' Chevron's Indonesian Deepwater Development in the Makassar
Straits is expected to supply 50 LNG cargoes/year over 2017-2019, 30 cargoes
over 2020-2021, 16 cargoes in 2022 and 10 cargoes in 2023, Wacik said. The
gas from the project will be processed at the Bontang LNG plant.
--Anita Nugraha, email@example.com
--Edited by Deepa Vijiyasingam, firstname.lastname@example.org