Viriya P. Singgih, Jakarta – State-owned gas company PT Perusahaan Gas Negara (PGN) has reminded the government not to hastily import liquefied natural gas (LNG) amid the current oversupply situation.

PGN head of marketing and product development Adi Munandir said many countries, including Indonesia, had been facing an oversupply of LNG due to an increase in global production amid sluggish demand. As a result, Indonesia had found it hard to find buyers for its LNG cargoes, he added.

For instance, PT Badak NGL, the operator of a major LNG plant in Bontang, East Kalimantan, has failed to find domestic buyers for 38 LNG cargoes this year, or 22.2 percent of its full-year production of 171 cargoes. Hence, it has sold those 38 cargoes on the spot market.

"This condition might have led foreign gas suppliers to sell their LNG at far more competitive prices and encouraged many industrial players in Indonesia to import rather than buying domestic LNG," Adi said recently.

"As there has already been an oversupply in the domestic market, imports will only increase the number of uncommitted LNG cargoes in the country and further make the upstream gas sector unattractive."

In 2018, PGN has been tasked by the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) with marketing uncommitted LNG cargoes produced from the Sanga-sanga block in East Kalimantan. The company has stated its commitment to undertake the task without any fees.

The Sanga-sanga block, operated by Virginia Indonesia Co LLC, produces 7.84 million tons of LNG throughout this year. (dmr)

Source: http://www.thejakartapost.com/news/2017/12/16/lng-imports-not-a-wise-decision-pgn-says.html