Indonesian LNG Exports Seen Falling 25% as Domestic Demand Climbs

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January 22, 2015

File photo of an SHI-built LNG carrier. Photo credit: Samsung Heavy Industries

By Fitri Wulandari

(Bloomberg) — Indonesia’s liquefied natural gas exports may drop by a quarter this year as domestic demand rises and the country allows several contracts with overseas buyers to expire.

Indonesia may ship 200 LNG cargoes overseas, compared with 267 cargoes in 2014, Amien Sunaryadi, the head of SKK Migas, the country’s upstream oil and gas regulator, said Wednesday in an interview in Jakarta. Domestic commitments may rise to 58 cargoes this year, from 31 cargoes in 2014, according to Sunaryadi, who was appointed the agency’s head in November.

Indonesia is increasing its reliance on natural gas to meet domestic energy demand as its aging oil fields pump less crude. Gas supply allocated for the domestic market is estimated to rise to 23.4 trillion cubic feet this year from 22.7 trillion in 2014, according to data published by the regulator in December. PT Pertamina Persero, the state-owned energy company, signed deals with Cheniere Energy Inc. to import as much as 1.52 million metric tons a year of LNG for 20 years starting 2018 to meet domestic needs.

“Our consumption will grow,” Sunaryadi said. “That will increase gas allocation for domestic use and cut allocation for exports.”

SKK Migas also won’t extend LNG export contracts that expire this year, he said.

Indonesia, a former member of the Organization of Petroleum Exporting Countries, plans to boost crude production this year by 6.9 percent to 849,000 barrels a day, Sunaryadi said. Output has fallen more than 50 percent since the mid-1990s as shifting regulations and complicated permits discourage investments in new fields.

“We need to explore first to find oil,” he said. “Our exploration hasn’t been aggressive in the past years.”

The regulator also plans to terminate contracts for 41 blocks that are in an exploration stage this year, Sunaryadi said. Contracts will be terminated for companies that have failed to meet performance targets, haven’t found oil or gas or with expiring contracts, he said.

Copyright 2015 Bloomberg.

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