Jakarta Globe 5 Feb 10;
Bent on securing adequate gas supplies for domestic industrial needs, the government is planning to limit exports of liquefied natural gas if necessary.
Energy Minister Darwin Saleh said on Thursday that a new presidential instruction was being drafted to regulate LNG exports.
“We are currently waiting for the presidential instruction,” he told reporters, adding that the decision on the regulation was a result of a closed two-day cabinet meeting that wound up on Wednesday. “We had a cross-sector discussion involving governors, ministers and state-owned enterprises on how to create energy security by opening new gas fields and gas reallocation.”
For years, local companies requiring gas as a raw material in their production process, such as ceramics makers, fertilizer firms and state power company PLN, have complained about the lack of a steady supply.
Evita Legowo, director general of oil and gas at the Energy Ministry, said one contract would be immediately affected if the policy became effective this year. A contract for the supply of gas to Japanese buyers from the Mahakam Block in East Kalimantan, which is operated by French oil and gas firm Total E&P Indonesie, expires in 2010.
The government had earlier approved in principle a contract extension to 2020, but as yet there has been no final decision.
Darwin said the government would also consider importing gas. “If the price is good, and we are short of supply, we could import, but this does not mean that we will rely on imports for gas,” he said.
Achmad Widjaya, chairman of the Indonesian Ceramics Association, however, said he doubted the government’s commitment to prioritize domestic gas demand.
“If the government said so, our first question is whether the statement is serious or not. The government’s energy policy has never really supported the real economy,” Achmad said. He added that reaching economic growth targets would be difficult if energy needs for productive sectors could not be secured.
Hari Karyuliarto, the head of the LNG business at state-owned oil and gas firm PT Pertamina, said the company had to “follow the instructions of the government.” He said the plan would not pose any problems if the selling price at home met the commercial value.
Fauzi Ichsan, an economist at Standard Chartered Bank, said that since foreign buyers usually paid higher gas prices than domestic ones, the government would have to cover the difference.
Maman Budiman, a spokesman for US-based Exxon Mobil, pointed out that this year, Exxon has committed 55 million standard cubic feet of gas a day from its field in Arun, Aceh, to state-owned fertilizer company PT Pupuk Iskandar Muda.
“But if the government wants us to increase our allocation for the domestic market, we may not be able to fulfill it because we do not have additional gas reserves.”
