RI gas reserves undeveloped due to lack of market, unworkable policy

Many of Indonesia's huge natural gas reserves finds remain undeveloped due to a lack of markets and an unworkable gas policy, according to William T. Fanagan, president of the Indonesian Petroleum Association (IPA) and president of oil and gas firm PT Gulf Resources Indonesia.

Fanagan said that over the past five years between 1994 and 1999, Indonesia added to its reserves 5 billion barrels of oil equivalent, 80 percent of which was natural gas.

"The government must work closely with the industry to develop new dimensions in offshore markets. We also need a workable gas policy that promotes both the widespread use of gas and invests in expanded gas infrastructure," he said during the Investment Summit on Mining and Energy on Wednesday.

He said that a workable gas policy would generate more revenues for the government by allowing more oil exports and reduce the use of subsidized fuel.

He added that it would also expand gas exploration and development of new fields.

Fanagan said that security and sanctity of a contract remained a concern to investors.

According to IPA statistics, Indonesia's current gas reserves total 136 trillion cubic feet, or a 46-year supply at current production rates.

Meanwhile, president of state owned gas distribution firm Perum Gas Negara (PGN) Qoyum Tjandranegara said that another problem facing investment in the natural gas sector of the energy markets is that gas at the consumer level has to compete against highly subsidized petroleum products. (*)