Domestic market can absorbs a cut in Japanese gas import

President of state-owned gas distribution firm Perum Gas Negara (PGN) A. Qoyum Tjandranegara said that the domestic market can absorbs the excess in the country's liquefied natural gas (LNG) export as Japan cut down its gas import.

"We're concern with the decline in the Japanese LNG import. But if the gas supply can be sold in the domestic market, it will be more profitable because LNG price here is higher than the export price," Qoyum said.

He said that the LNG domestic price was higher than the export price of between US$2-$3 per million metric british thermal unit.

He acknowledged, however, that the domestic gas market would depend on the condition of the real sector and the availability of the distribution infrastructure.

Bisnis Indonesia said that Tokyo Electric Power Company (Tepco) would cut its LNG import to around 150,000 tons per year compared to the previous import volume of 500,000 tons per year.

Tepco would also cut down the period of its gas purchase contract with Pertamina from 21 years to between 5-10 years.

Tepco's step would also be followed by Tohoku Electric Power Corp. amid uncertainty in the Japanese electricity demand.

Japan is Indonesia's largest LNG market.

Secretary General of the Ministry of Mines and Energy Djoko Darmono said that the government would study its contract with Japan on whether the latter could unilaterally cut down its gas import.

He declined to provide further comment.(*)