By KUNA
Tokyo : Indonesian state-owned oil company Pertamina has decided to reduce its annual supply of liquefied natural gas (LNG) to Japan, the world’s biggest LNG importer, from the current 12 million metric tons to 2-3 million tons, the major Japanese business daily reported Sunday.
If the plan is implemented, effective with contracts that will come up for renewal between 2010 and 2011, Indonesia’s total annual LNG exports will fall to less than 5 million tons, one-third current levels, the Nikkei Shimbun said, quoting informed sources.
Although such large-lot users as electric power and gas companies are signing deals with Middle Eastern and other countries to make up for the expected fall in Indonesian imports, the reduction may deal a serious blow to Japan from the standpoint of its long-term energy security policy at a time when global LNG demand is surging, the daily said.
Indonesian gas accounted for 22 percent of Japan’s total LNG imports in 2006, but contracts covering 12 million tons, or 80 percent of the total, will come up for renewal in 2010 and 2011.
Pertamina wants to reach a basic agreement by year-end with six Japanese companies extending its contracts with them by 10 years under its own terms, the report said.
Under the renewed contracts, however, annual Indonesian LNG shipments from a terminal in eastern Kalimantan will be reduced to 3 million tons during the first five years and then to 2 million tons over the following five years.
The Japanese users had asked the Indonesian state-owned firm to ensure annual supply of at least 6 million tons under the new contracts, but Pertamina decided to cut the amount drastically, saying output from existing gas fields has fallen significantly and that domestic LNG demand is growing steadily as well.
The Indonesian firm is also asking for 11-13 dollars for 1 million BTUs (British thermal units) of LNG, the highest figure on the global market.
The Japanese users are already moving to increase LNG imports from Australia and countries in the Middle East because Pertamina has dropped hints over the past several years that it will reduce its supply.