Gas: Export vs domestic pressures

President SBY should make an important decision early next week which may divide further the cabinet. He should decide whether to extend LNG export of 12 million tones/year to Japan or downsize it.

Japan is the largest LNG buyer which absorbs almost 68% of Indonesia's total LNG export. There are contracts to supply 12 million tones/year to Japan that expires 2010. The cabinet is clearly divided on this. Industry Minister Fahmi Idris echoed VP Jusuf Kalla asking for significant reduction in LNG export for the sake of domestic customers. Mr Idris even called a drastic cut of 50%.
Energy Minister Purnomo Yusgiantoro, as usual, is showing unclear position. One time he said that government will cut LNG export for the sake of domestic customers, but then he would say, we could still export LNG as long as we push the development of other gas fields in other areas.
Indonesian Chamber of Commerce & Trade had also urged government to ask more concessions from Japan should the LNG export maintained at the current level.
Pertamina president Ari Soemarno stated this week that based on existing proven reserves in East Kalimantan, Indonesia could only extend LNG export contract to Japan at 4 million t/y the most.

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