GAS AND POWER: Indonesia looks for more gas

• Date: 01 January 2018
• DOI: http://doi.org/10.1111/oet.12547
• Published date: 01 January 2018

GAS AND POWER

Indonesia looks for more gas

With many mature elds in long-term decline, Indone-

sia is now looking for gas to import, some of which

maybeusedtoenablethestateoilandgascompany,

Pertamina, to fulll its obligations under its present

long-term export contracts. Indonesia remains a net

exporter of gas (see Tab l e E) but i s s tru g g l in g t o s at i s f y

the demand for exports as well as that from the domestic

market.

Imports needed

Up to a few years ago, Indonesia was seeing its exports

squeezed as productionpeaked and domestic consump-

tion grew. Plans were drawn-up for liqu eed natural gas

(LNG) imports from 2019 to enable Pertamina to meet

both its export obligations and demand from domestic

consumers. As well as being a major exporter of LNG,

mainly to Asia, Indonesia also supplies gas by pipeline

to Singapore and Malaysia.

In 2017, however,the government announced that gas

productionwasbetterthanpredictedandthatimports

would probably not be needed until 2020. Any revival

in output is likely to be short-lived, however, as produc-

tion continues to fall in many other elds, including the

country’sl argest gas prospect, Mahakam, despite strenu-

ous eorts by Pertamina to drill additionalwells. Output

from the oshore block appears to have fallen by about

200 mn cfd in 2017 to just over 1.4 bn cfd.

Better than expected

Indonesia may nevertheless be able to postpone regu-

lar imports of LNG for a ye ar or so thanks to a fa ll in

domestic consumptionin recent years as both power sta-

tions and heavy industry burn more coal on account

of its cheapness compared to gas. e take-up of nat-

uralgashasbeeninhibitedbyinadequateinfrastruc-

ture,althoughthisissettochangewithanumberof

planned extensions to both the transmission and distri-

bution networks.

Table E

Indonesia: Gas Prole, 2017

Proven Reserves 98 tcf∗

Reserves Remaining 39 years†

(bn cfd)

Production 6.8

Consumption 3.7

Net Exports 3.1

∗As of 1.1.17

†Based on 2017 estimated production

Totals rounded

Source: (Reserves) Oil & Gas Journal;

(Other) OET estimate

If consumption goes up as a resultof this, t he country

is able to import LNG on a spot basis using its two

oating receiving terminals. It also has the option to

take LNG for domestic use under a 20-year contract

for 200 mn cfd of LNG from 2018 from US company,

Cheniere Energy.

More imports needed

Other LNG imports will be required aer 2019. Indone-

sia has a contract with Australia’s Woodside Energy for

up to 130 mn cfd, beginning in 2019 and another with

ExxonMobil fora similar amount for 20 years,b eginning

in 2025.

Earlier in 2017, the US delivered a major a blow to

Indonesia’s production prosp ects by saying t hat it was

not economic under current circumstances to develop

the huge East Natunadis covery o Sarawak,in the S outh

China Sea, estimated to contain 46 tcf of recoverable

gas. Its remoteness makes it expensive to develop, as

does the high carbon dioxide content of the gas. e

Ministry of Energy and Mineral Resources says it still

wishes to proceed withthe project and has invited other

companies to participate; but if it is ever developed, that

will be long aer the originally planned start-up date of

2020.

© 2018 John Wiley& Sons Ltd