Pertamina will speed up Gas Import from America

KATADATA - PT Pertamina (Persero) admitted to have signed a cooperation agreement with Cheniere Energy Inc. Through this cooperation, Pertamina will import crude oil and liquid natural gas (LNG) from the US-based company. 

“The one is United States is related with Indonesia’s long-term plan to import LNG. We’ll have a contract with them to supply LNG to Indonesia,” said Pertamina’s president director Dwi Soetjipto in the SOE (State-owned Enterprises) Ministry, Jakarta, Monday (26/10). 

Dwi is still reluctant to mention the amount of LNG that will be imported from the company. Katadata’s source in Pertamina said that the investment value from the cooperation sales and purchase agreement reaches US$ 13 billion. 

Pertamina and Cheniere have just inked the cooperation agreement. Cheniere will start to supply LNG in 2017 or 2018 with a ten-year contract. The sales and purchase agreement will speed up the agreement that both of the firms have done in the past. 

Pertamina had once inked a cooperation agreement with Cheniere. Back then Pertamina was predicting that there will be a shortage in gas supplies for the domestic needs, which is in the amount of 2 million tons in 2019.

This deficit was predicted to happen due to a growth in domestic gas consumption pattern in the amount of 4.8 percent per year from 2015 till 2025; while the sustaining gas infrastructure in this country is still very minimum. And so, import is necessary to cover up the needs.

On December 4^th 2013, Pertamina inked the gas sales and purchase agreement with Cheniere in the amount of 760,000 tons. On July 1^st 2014, Pertamina was signing another sales and purchase agreement with Corpus Christi Liquefaction, LL.C., which is the subsidiary of Cheniere Energy. 

With the two agreements, Pertamina will start to import gas from Cheniere in the amount of 1.52 million tons in 2019. The supply is still not adequate indeed. But the plan is the supplies from Africa will cover the 480,000 tons of shortage. 

It is still unclear what are Pertamina’s reasons to import gas so soon at this moment. Pertamina had revealed the import plan once to the House several times ago. But, it is not clearly explained about the timing of the import. 

During a hearing meeting with Commission VII (19/10), Dwi said that Indonesia will import gas in the amount of 1.5 billion cubic feet (BCF) to 4.4 BCF in 2025. According to Dwi, the cooperation that he does at this point is to anticipate the import. 

After the signing of the agreement, Pertamina is now thinking about the purchase mechanism so that there will be no loss because of the LNG purchase. Gas price is low indeed, but the distribution cost is still quite big. 

“We’re still trying to find the solution so that we won’t suffer from a loss in the transportation cost,” Dwi said.