Indonesia will allocate as much as 75 percent of the liquefied natural gas from the Donggi-Senoro plant for exports, allowing Mitsubishi Corp. and PT Medco Energi Internasional to proceed with construction stalled since 2008.
The country will retain 25 percent to 30 percent of the gas from the project on Sulawesi Island for local buyers, Darwin Saleh, the nation’s energy minister, said in a mobile phone text message today. Medco, which has a 20 percent stake, rose to an eight-month high in Jarkata trading.
Mitsubishi and its partners, which also include PT Pertamina, had wanted to export the gas to utilities in Japan, helping the world’s second-biggest economy secure energy supplies and compensating for cuts in shipments from existing LNG projects in Indonesia. The Indonesian government had said the gas should be sold at home to meet rising domestic demand.
“We are grateful the energy ministry has made a decision. Now we can proceed with the project,” Karen Agustiawan, president director of Pertamina, which has a 29 percent stake, said by telephone in Jakarta.
Owners of LNG plants typically secure buyers for the fuel before construction begins. Gas supplies for the plant will come from the Senoro and Matindok fields. Medco and Pertamina hold equal stakes in the Senoro field, while Matindok is owned by Pertamina.
The 2 million-metric-tonne-a-year LNG plant was scheduled to be completed in 2014, according to the partners.
Medco shares rose 4.2 percent to 3,125 rupiah as of 9:35 a.m. local time, set for its highest close since October 19.
“The project will contribute huge amount of revenue to the Indonesian government,” Lukman Mahfoedz, a director at Medco said by phone. “The domestic allocation will have a multiplier effect to local industry.
Korea Gas Corp. and Kyushu Electric Power Co. will buy 1 million tonnes of LNG per year from the plant, replacing Kansai Electric Corp. which backed out of the purchase agreement, Hari Karyuliarto, head of Pertamina’s LNG business, said March 25.