Indonesia signs $1bn LNG project with Mitsubishi
Jakarta, August 20, 2007
Indonesia's state oil firm Pertamina signed an agreement worth about $1 billion to build a liquefied natural gas (LNG) plant on Sulawesi island with Japan's Mitsubishi and Medco Energi.
"We will build a plant with a capacity of 2 million tonnes per year," Pertamina's president director Ari Soemarno said.
He said construction on the project, estimated to be worth $1.126 billion, was due to begin in the second quarter of 2008 and should be completed by 2010.
"All production of the plant will be exported to Japan," Soemarno added.
The signing took place during a three day visit by Japanese Prime Minister Shinzo Abe to Indonesia which began on Sunday.
Indonesia, the world's second largest LNG exporter after Qatar, has failed to meet its contractual commitments to traditional markets such as Japan, South Korea and Taiwan due to a slump in production.
The future of Indonesia's LNG exports has been placed in some doubt as it plans to divert more of its production to domestic use at a time when its oil and gas output has been under pressure from ageing fields and lags in bringing new production onstream.
Indonesia, Asia Pacific's sole Opec member, has far more gas than oil but it faces limited supplies due to long-term LNG export commitments, which it is reviewing.
Indonesia has about 182 trillion cubic feet of natural gas reserves. Reuters