The Upstream Oil and Gas Regulatory Task Force (SKK Migas), along with Inpex Corporation, is still studying global liquefied natural gas (LNG) market projections to secure long-term gas sales contracts for the Masela Block.
Deputy of Finance and Commercialization at SKK Migas, Kurnia Chairi, stated that the exploration of long-term contracts is still in process with potential buyers. “It’s too early to mention potential buyers because it’s still in the early stages of negotiation; the most important thing is the implementation of the project, which must start immediately,” Kurnia said on Thursday, February 15, 2024.
The certainty of gas buyers is crucial to secure the final investment decision (FID) for the Abadi gas field project. Meanwhile, SKK Migas has gathered interest from domestic and foreign potential buyers with a total gas demand of approximately 25 million tons per year (mtpa).
Several buyers have signed letters of intent (LoI) regarding the potential purchase of gas from the Masela Block in the future. However, some gas commercialization plans are still being finalized. On the other hand, he said, his institution is studying the supply and demand aspects of LNG at the global and Asian levels.
LNG imports from Japan have continued to decline over the past 10 years amid efforts to increase nuclear power plant capacity in Inpex’s home country. LNG imports from Japan reached around 60 million tons in 2023, a drastic decrease from around 100 million tons of LNG purchases in 2011.
“Inputs related to global and Asian LNG supply and demand are being studied and discussed,” Kurnia said.
As previously reported, Shell’s LNG market outlook predicts a 50 percent increase in liquefied natural gas (LNG) demand by 2040 as the coal-based industry transitions to gas in China and some countries in South and Southeast Asia.
Shell projects LNG demand in 2040 to range from 625 million tons to 685 million tons annually after 2040. Shell noted that global LNG trade totaled 404 million tons in 2023, a significant increase from trade throughout 2022 at 397 million tons.
“China seems poised to dominate LNG demand growth this decade as industries strive to reduce emissions by switching to gas,” Shell Energy Vice President Steve Hill said in a media statement on Thursday, February 15, 2024.
He added that the decline in domestic gas production in several countries in South and Southeast Asia would boost LNG demand for decarbonization efforts from several developing countries in the future.
