Indonesia may export surplus: LNG to quake-hit Japan

Indonesia may export surplus liquefied natural gas (LNG) from its Bontang plant to Japan after the quake-stricken nation appealed to the world's third-largest LNG exporter for more supplies, an energy official said on Friday.
Energy officials could not say how much gas was available from a field operated by Total, but one government minister said the decision would go up to the president, given Indonesia is trying to conserve LNG for its own growing domestic demand but also please Japan, a major infrastructure investor.
Bontang, on Borneo island, is expected to see output fall 6 percent this year, but it has surplus LNG left over from last year that could be shipped to Japan, said Evita Legowo, director general for oil and gas at the energy ministry. "We may do that for the non-export committed LNG from the Bontang plant," Legowo told reporters.
Indonesia's oil and gas watchdog BPMigas said this week that 20 cargoes of Bontang LNG were available for auction, though there are also some 40 cargoes awaiting government approval to ship to Korea Gas Corp (KOGAS) under a term deal agreed last year. Indonesia's energy minister said he has not yet signed the deal to ship Bontang LNG to KOGAS, as he is waiting for the result of discussions between the energy ministry and BPMigas on Japan's request for LNG and oil supplies.
Since KOGAS, the world's top corporate buyer of LNG, has already said it will supply 400,000-500,000 tonnes of LNG to Japan, it is possible that some of the KOGAS commitment could also come from Indonesia. The deadly earthquake that hit Japan last week took about a fifth of Japanese nuclear power plant capacity or 9,702 megawatts offline, and analysts say LNG is the most likely replacement for nuclear power.
Japan's vice-minister of foreign affairs Makiko Kikuta met government officials in Jakarta on Thursday and asked the country to supply more LNG and also crude oil, to replace a "massive shortage" of electricity. "A team from the energy Ministry and BPMigas is evaluating it the government is considering many factors on gas allocation - domestic and overseas demand - and considers proper ties with its main markets," Energy Minister Darwin Saleh told reporters.
In trying to procure LNG, Japan has been dealing directly with producers and sometimes even governments, by-passing traders and brokers in the spot market in search of secure supplies. But Indonesia, the world's No 3 LNG exporter after Qatar and Malaysia, is increasing its use of natural gas at home to avoid costly imports and dwindling domestic supply. Its exports of LNG will fall to 362 cargoes this year from 427 in 2010.
"It will be decided by the President. Personally, I think this is a sensitive issue to be answered. The impact will be very political," said Industry Minister M.S Hidayat. Japan has committed up to $52.9 billion in infrastructure investments over the next 15 years in Indonesia, as Southeast Asia's biggest economy tries to overhaul its transport network to spur growth but can only fund one third of its needs.