By ERIC YEP
Indonesia's energy regulator said Friday that nations
willing to invest in the country's hydrocarbon sector would get
priority for liquefied natural
gas deliveries as rising domestic demand has curtailed the
amount of gas available for export.
Indonesia is a key LNG
exporter to Asian countries like Japan and South Korea, but
increasing domestic demand due to a growing economy and
political pressure to control local resources is forcing the
government to divert exports to local consumers.
"As domestic demand has increased rapidly, priority is now
given to supply domestic customers. However, with current and
future potential reserves, Indonesia will be able to maintain
its contribution to the export market," Widhyawan
Prawiraatmadja, deputy of planning at SKKMigas, said at the LNG
Supplies for Asian Markets conference in Singapore.
SKKMigas is a unit of Indonesia's Ministry of Energy and
Mineral Resources tasked with overseeing the upstream oil and
Despite world-class coal deposits, 4 trillion cubic meters
of proven gas reserves and 3.9 billion barrels of proven oil
reserves, Indonesia isn't keeping pace with the energy needs of
its fast-expanding population of 248 million and near 6%
Mr. Prawiraatmadja said the government is caught in a
dilemma between controlling hydrocarbon output for domestic
needs and attracting oil and gas majors to prevent exploration activity from
However, Indonesia needs to attract foreign investment in
the upstream hydrocarbon sector to help develop new reserves
and maintain economic growth, he said.
Indonesia used to be a member of the Organization of the
Petroleum Exporting Countries until 2008, as it became a net
oil importer. It is now looking to its large gas reserves to
boost energy exports.
Although foreign investors are wary of political uncertainty
and red tape, some new gas investments have materialized.
In June last year, Japan's Inpex, Royal Dutch Shell and
Indonesia's state-owned Pertamina agreed to invest an initial
$12 billion to develop offshore gas deposits, and spending may
rise to $20 billion.
In November, BP gained government approval for a third LNG
processing plant at its 37%-owned Tangguh project in Indonesia's West Papua
Oil and gas investment in Indonesia may rise by a fifth to
$26.2 billion in 2013 from the $21.9 billion commitment last
year, SKKMigas said earlier this month.
Dow Jones Newswires