Indonesia asks buyers to allow delay of LNG cargoes
2004-7-16
    Indonesia is in talks with its liquefied natural gas (LNG) buyers, including Korea Gas Corp (KOGAS), to delay the supply of six term cargoes, an official of BP Migas, the government oil and gas watchdog, said on Wednesday.
The official said the request for a delay, which was also made to Japanese utility Tohoku Electric Power Co Inc (Tokyo:9506.T - News), was to meet demand for gas from Indonesian fertiliser firms.
    "I can confirm that Indonesia is in talk with KOGAS and Tohoku to delay about six LNG cargoes supply. This is because Indonesia has to supply gas to domestic fertiliser firms. There is no problem at the Arun LNG plant," the official, who declined to be identified, told Reuters.
    "The talks are about the delay of three cargoes for KOGAS and two cargoes for Tohoku and another cargo also to a Japanese buyer, but I don't know what firm that is. The discussion is not final yet," the official said.
    KOGAS (KSE:036460.KS - News), the sole importer and wholesaler of LNG in energy-deficient South Korea, imports 5.3 million tonnes every year under three long-term contracts from Indonesia.
    Tohoku Electric buys three million tonnes of LNG from Indonesia a year under a long-term agreement.
    Indonesia is seeking to extend its LNG contracts with KOGAS for 2.3 million tonnes under a 1986-2007 deal with the Arun LNG plant.
    The official said the extension contract will not come from Arun, because there will not be much gas for LNG plants.
    "Arun may only operate two LNG plants some time in 2007 from the current four plants. This is because there is not much gas to supply four plants," the official said.
    Indonesia has said it planned to export 25 million tonnes of LNG this year to Japan, South Korea and Taiwan.
    Indonesia plans to deliver 355 standard LNG cargoes from Bontang and 110 cargoes from Arun in 2004, BP Migas marketing chief Djoko Harsono said in January.
    Each standard cargo contains 125,000 cubic metres (4.4 million cu ft) of LNG. One tonne of LNG is equal to 2.32 cubic metres.
    In 2003, Bontang delivered 355 cargoes and Arun shipped 115.
    Indonesian media had reported that supply had declined at the LNG export centres in Arun in strife-torn Aceh, Indonesia's western-most province, and at Bontang in East Kalimantan province.
    Indonesia's reputation as a reliable LNG supplier came into question in 2001 after the Arun gas plant shut down for several months after operator ExxonMobil Corp (NYSE:XOM - News) withdrew its staff due to high security risks from separatist violence.
    Production was disrupted again last August by a fire at a gas field.
    Indonesia, Asia's only member of the oil cartel Organisation of the Petroleum Exporting Countries, has swung to being a net importer of crude in recent months.
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