Indonesia to cut LNG supplies to Japanese clients

Monday, 03 December 2007

According to the Japanese business newspaper paper, Nikkei Shimbun, the reduction will involve contracts that come up for renewal in three years.


Indonesian gas accounted for 22 percent of Japan's total LNG imports in 2006, but contracts covering 12 MTPA, or 80 percent of the total, will come up for renewal in 2010 and 2011.


Pertamina wants to reach an agreement by the end of 2007 with six Japanese companies, extending its contracts with them by 10 years under new terms.


Indonesia is also reportedly asking for $11 to $13 per million British thermal units, the highest price on the global market.


Under the renewed contracts, Indonesian LNG shipments from eastern Kalimantan will be reduced to 3 MTPA during the first five years and then to 2 MTPA over the following five years.


The Japanese users had asked the Indonesian state-owned firm to ensure annual supply of at least 6 MTPA under the new contracts, but Pertamina decided to cut the amount because of lower output and growing domestic gas demand.