Singapore joins IEA as SE Asia oil demand set to rise 80% by 2040
Picture for representation REUTERS/Edgar Su/File Photo

Fitch Group's BMI Research said Indonesia is projected to become a net importer of Liquefied Natural Gas (LNG) by 2020, with an estimated annual growth rate of 4% over the next 10 years. This was amid the increasing demand and dwindling output at mature gas fields.

The Jakarta Post reported that the annual growth rate of 4% was attributed to the biggest demand coming from the power generation sector. However, gas supplies are set to fall due to natural declines at various mature gas fields. This would ultimately cause delays to several major projects.

France's largest gas-producer Total E&P Indonesie was estimated to experience a slump in their supply at the Bontang LNG plant in East Kalimantan. A drop of 10% was expected this year, citing expenditure cuts in the current market volatility of oil prices. This was also attributed to the uncertainties over the ownership of the Mahakam block.

"State-owned Pertamina signed a deal with the United States' Corpus Christie project starting next year and it also signed an agreement with the United Arab Emirates (UAE) National Oil Company to purchase LNG supplies from the UAE counterparts based on needs," the research house said.

"This will see Indonesia becoming a net LNG importer by 2022," it added.

The report said with the country's need for gas imports grows, more term deals could be coming their way.

Indonesia has exported 3.9 million metric ton of LNG in the first quarter of the year, a drop by 7.5% year-on-year while falling 15% below the five-year average.

In May, The Jakarta Post reported the purchase of LNG between Pertamina and Emirates National Oil company would no longer be carried out through a third party. The meeting between the Energy and Mineral Resources Minister Ignasius Jonan and a UAE counterpart Suhail Mohammed Faraj Al Mazroui sparked discussion over the development of the Ruby gas field in the Sebuku Block by Mubadala Petroleum, a UAE-base oil, and gas company.

As of May, the value of the investment made by UAE counterparts into Indonesia reached US$2 billion and an estimated new investment amount worth US$5 billion following the visit by Suhail.