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Indonesia scraps LNG import plans on higher production outlook

Jakarta — Indonesia will no longer need to import LNG by 2025 to meet the shortfall in domestic natural gas production as previously expected, as the country brings new projects on stream by 2024, the energy minister told reporters Wednesday.

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The upbeat projections are based on a revised production outlook and a revamped plan to attract upstream investment that have led to major discoveries and project approvals in recent months.

If successful, the bevy of new projects will mean that Indonesia, which has one of the world's largest untapped gas reserves, will maintain its position as an LNG exporter and simultaneously meet growing domestic gas demand.

"Indonesia will never need to import gas, unless it's LPG," Energy and Mines Minister Ignasius Jonan told reporters on the sidelines of the Gas Indonesia conference in Jakarta.

The government previously issued a study on the supply-demand balance of gas markets that estimated a need for imports from 2025 as current fields deplete and no new ones were being commercialized.

Jonan said that since the study was published new discoveries have been made including Repsol's Sakakemang gas field that may contain as much as 2 Tcf of reserves.

Spanish oil company Repsol is committed to accelerate the project to three years from five, the minister said.

Related story: Indonesia's IMO 2020 pushback raises concerns of wider non-compliance

NEW GAS PROJECTS

Executives said there had been renewed activity in Indonesia's upstream sector in recent months because of the Inpex-led Abadi LNG project moving forward, injecting much needed optimism after oil majors exited a series of flagship exploration and production projects.

New gas production between 2021and 2024 will come from Pertamina's Jambaran Tiung Biru project in East Java, Chevron's long-standing Indonesia Deepwater Development project, Tangguh LNG's Train 3 and the Sakakemang project, Dwi Soetjipto, head of upstream regulator SKK Migas, said.

The Jambaran Tiung Biru project is expected to start in 2021 with a volume of 170 MMcf/d, according to SKK Migas.

The BP-led Tangguh LNG project with a capacity of 7.6 million mt a year has been planning to add a third production train by 2020, which may be delayed by a year due to engineering and procurement issues.

The project should come on stream by the third quarter of 2021, Soetjipto said, adding that the regulator expects BP to speed up implementation.

Soetjipto also said Chevron is still discussing the economics of the IDD project with its project partners Italy's Eni and China's Sinopec and is expected to bring the project on stream by the first quarter of 2025 at the latest.

"Under the original plan, the IDD has to be on stream in 2024. We expect it won't be delayed much due to the discussions," Soetjipto said.

He said the gas from IDD will be connected to Bontang LNG, which is underutilized, and there is no need to build new LNG exporting infrastructure that will help project delivery.

Additionally, the government will give a 20-year of extension contract to Chevron on IDD, similar to the terms offered for the Abadi LNG project that have been well received by the industry.

Indonesia may still face a long-term gas deficit of about 1-2 Bcf/d by 2035, as demand from electricity and petrochemical sectors grows along with higher GDP, Pertamina's investment planning and risk director Heru Setiawan said separately.

-- Anita Nugraha, newsdesk@spglobal.com

-- Eric Yep, eric.yep@spglobal.com

-- Edited by Jonathan Dart, jonathan.dart@spglobal.com