7 Million Tonnes of Indonesian LNG Uncommitted for 2017 Delivery

There are currently 63 uncommitted cargoes of liquefied natural gas (LNGLF) (LNG) for 2017 delivery from Indonesia's Tangguh and Bontang projects, Wiratmaja Puja, the country's Director General of Oil and Gas, said on Thursday.

"We are still oversupplied," Puja said, noting that the government was looking for committed buyers and that deals for 13 of the cargoes were currently being negotiated.

"It would be real pity if we had to cut production."

The 63 cargoes is the equivalent of about 6.99 million tonnes of LNG, based on Reuters calculations. A standard sized LNG cargo contains about 150 to 170 million cubic metres of natural gas or about 111,000 to 125,800 tonnes of LNG.

Last year, Indonesia exported just over 17 million tonnes of LNG.

Puja added that for 2018 there were still "more than 60" uncommitted cargoes.

Indonesia gets priority on a large portion of domestically produced LNG, but development of infrastructure to absorb the fuel has been slower than hoped both locally and abroad, putting pressure on gas prices.

"We have prepared everything that has been requested for electricity, but we are still developing the infrastructure," Puja said, meaning that LNG supply has been allocated.

Despite the inability to use the gas domestically and falling demand abroad, Indonesia has approved an expansion of the Tangguh LNG project in the country's West Papua province that will boost annual LNG production capacity by 50 percent.

Indonesia is looking to expand small-scale LNG regasification capacity in central and eastern Indonesia in order to meet soaring energy demand in the region and to soak up LNG supply.

The country has ramped up gas consumption targets for environmental reasons, and plans to subsidise natural gas for industrial buyers.

The LNG demand target from Indonesian state power utility Perusahaan Listrik Negara (PLN), however, was unchanged this year, amid slower growth in electricity use and declining industrial power demand.

Indonesia is the world's 11th largest gas producer, according to the Indonesian Gas Society, and ships LNG from Bontang and Tangguh to Japan, South Korea and China, as well as to domestic buyers.

Badak NGL, which operates the Bontang LNG plant, is a unit of state energy company Pertamina, while the Tangguh project is majority owned by BP.

Asian liquefied natural gas (LNG) gas prices hit a nine-month high of $6.55 per million British thermal units this month. That's still 51 percent below the price two years ago.

By Wilda Asmarini