Indonesia promises LNG to Indian Oil Corporation

Vol 4, PW 12 (19 Jul 00) Midstream & Downstream

From the same region comes news that Indian Oil Corporation is set to buy 1.8m t/y of LNG from Indonesia's state-owned oil company Pertamina.

But why is Indian Oil buying LNG from Indonesia Is it because the company wants to add another MoU to the long list of redundant MoUs it already has Or is it because Indian Oil genuinely feels that the 7.5m t/y contracted by Petronet-LNG from Qatar for Dahej and Cochin is not enough for India Who knows..

.but chairman Mohammed Pathan of Indian Oil signed the agreement during a July 13th visit to Jakarta.

Baihaki Hakim, President Director, signed on behalf of Pertamina. First reports suggest the agreement is vague, wide-ranging and generally 'fluffy' in nature, with 'joint cooperation' agreed in refining, exploration, consultancy, and information technology.

Crucially it contains a section where Indian Oil agrees to offtake 1.8m t/y from the Bontang LNG plant in East Kalimantan. With six trains, Bontang has an annual production capacity of 15.7mt/y and is the largest LNG plant in production in the world, according to Pertamina.

Why, however, has the Indonesian company decided to commit 1.8m t/y to Indian Oil, which has no firm plans to set up an LNG receiving terminal in India - save an on/off proposal with Petronas of Malaysia at Kakinada Indian Oil's stake in the LNG business is restricted to its 10% stake in Petronet-LNG and its newly acquired role as LNG salesman along the Hazira-Bijaipur-Jagdishpur pipeline. Does the agreement with Pertamina signal that it has a clearly defined LNG strategy of its own The agreement with Pertamina raises more questions than it answers.

LNG Summit