Indonesia’s Bontang LNG exports down as storage, domestic sales pursued

Source: Heren

2019/04/15

Exports from Indonesia’s Bontang LNG project dipped each month in the first quarter on 2019 from a year ago as weak prices prompted a move to storage and more sales were made into the domestic market to relieve high inventory levels, according to data and trade sources.

Bontang, operated by state-owned Pertamina subsidiary Badak LNG, has faced headwinds in spot sales with trade sources, including from Japan, saying recent export sell tenders were not awarded because bids were deemed too low.

Four cargoes were offered from Bontang in a tender that closed on 8 February and three cargoes were offered in a tender that closed on 1 March. In both cases, market source said the tenders were not fully awarded. A Pertamina official declined to comment.

Shipments from Bontang project to local Indonesian terminals more than doubled year on year in February and March, while total deliveries from the facility fell 23% and 10% over the same period, LNG Edge data showed.

Managing market dynamics

Declining output from gas fields that feed the Bontang facility also partially contributed to falling first quarter exports.

showed LNG production at the Bontang facility has been on a steady decline, falling from a peak of 21m tonnes in 2001 to 8.4m tonnes in 2019.

Still, as and other regional sources such as the PNG LNG project in Papua New Guinea ramp up production, the Bontang facility has managed regional oversupply through a combination of more domestic market sales and the use of floating storage for excess cargoes.

A Singapore-based trader said that excess LNG from the Bontang project has been partially loaded onto the 141,000bcm 
Galacia Spirit.

LNG Edge showed the Galicia Spirit docked at the pier of Bontang facility on 4 April. It departed around 24 hours later on 5 April.

The duration of the docking was long enough to load a cargo. The latest data indicated the ship is floating near the facility on 15 April.

The trader pointed the vessel’s draught is 9.7 meters, according to online data, indicating the ship is partially loaded.

While the draught of fully loaded vessels is normally 11-12 meters, the draught of ballast vessels is 7-8 meters, the 
trader added.

Another factor for the high stock levels is that contractual offtakers have exercised downward quantity tolerance (DQT) clauses for volumes from the Bontang facility to take advantage of weak spot prices, or because they also seek to manage 
inventories. Hendrian Sukardi