Kalla urges Japan to establish LNG plant in Indonesia

The Jakarta Post, Jakarta

Vice President Jusuf Kalla has invited Japan, heavily dependent on Indonesian exports of liquefied natural gas (LNG), to develop a plant here as Jakarta focuses on using the fuel for its growing domestic demand.

"In the future, we'll prioritize meeting growing gas demand in Indonesia. We'll only export it if we have a surplus," Kalla said during a meeting with executives of Toru Oil Japan in Tokyo on Thursday.

He acknowledged Japan's reliance on Indonesia for LNG, amounting to about 50 percent of its needs.

"We understand that, but Japan should also understand that gas demand in Indonesia has been increasing," he was quoted by Antara as saying. "That's why we urged Japan to develop the gas industry in Indonesia."

Most of Indonesia's gas exports go to Japan, with the remainder to South Korea and Taiwan. The three East Asian countries account for 12 million tons of Indonesia's LNG exports, delivered under long-term contracts.

Kalla said the terms of all current contracts would be honored but there was no guarantee they would be extended.

"But when they are completed, it's possible we cannot extend them because Indonesia will have to prioritize meeting local demand. We're facing huge demand in our local market," he said.

"It's our gas. So sorry, only when we have a surplus will we export. The most important thing is our national interest. There should be no one forcing us to lobby for the interest of a foreign country," he said.

"So the solution for the export problem is for Japan to come to Indonesia to develop the gas industry. I think Japan understands that."

Kalla said some of the contracts with Japan would end in 2008, and others two years later.

Exports of LNG have contributed to a shortage of fuel at home, including to several fertilizer companies. ASEAN Fertilizer, Iskandar Muda I and II, which are all located in Nanggroe Aceh Darussalam, were closed down due to the lack of gas supply.

"Also due to the shortage of the gas supply, the Kujang fertilizer is in crisis, and state-owned electricity firm PLN could not procure its gas supply for a number of power plants," he said.

"Indonesia and Japan are good partners in doing business, including in developing the oil and gas industries. This is very important."

Kalla was accompanied by National Development Planning Board Chairman/State Minister of Development Planning Paskah Suzetta; former finance minister Jusuf Anwar, who is a candidate for the ambassadorship to Japan; the mine and energy ministry's Director General for Oil and Natural Gas Iin Arifin Takyan; and Sofjan Wanandi, chairman of the Indonesian Employers Association.

Sofjan said Kalla's invitation was an interesting approach to accommodating the needs of both countries.

"The Vice President has asked Iin Takyan to find appropriate locations for Japan to develop gas plants," he said.

"Japan is very interested in developing liquefied natural gas in Indonesia. They will come to Indonesia soon to discuss the development of gas here."
Jawawa.net: Indonesian Business and Investment News Aggregator