Indonesia may terminate Singapore gas contract midyear

Major gas exporter Indonesia may terminate a gas export contract with a Singaporean company midyear, according to a local media Tuesday.

The government is currently reviewing the gas-export contract with Island Power (IP), as it has failed to secure a pipeline connection with another Singaporean company, Gas Supply Pte. Ltd. (GSPL), a subsidiary of Temasek Holdings, reported major national newspaper The Jakarta Post.

IP has yet to seal a deal for the utilization of a 12-km-long pipeline that belongs to GSPL, which is demanding payment for the use of the pipeline, which links up with Perusahaan Gas Negara ( PGN)'s 470-km-long pipeline network linking Indonesia and Singapore, it added.

Eddy Purwanto, deputy chairman of Upstream Oil and Gas Executive Agency (BP Migas), said Monday the government had sent a notification to IP in connection with the pipeline issue, which is one of the requirements already stated in the contract for it to go ahead.

Under the agreement between the government and IP, Indonesia is to deliver 110 million standard cubic feet per day (mmscfd) of gas over a period of 13 years to IP through a gas pipeline up until 2014.

Source: Xinhua alone the markets in other countries," he said.

Budi said Volkswagen had informed him it was looking into the possibility of investing in Indonesia, while Mercedes Benz would keep its base here and might expand its production.

"Audi will likely invest here but wants to wait for a while," he said.

According to Budi, the automakers are now looking at Indonesia due to falling lending rates, the faster pace of infrastructural development, the introduction of new car models and the increase in per-capita income.

But Ahmad Badawi, the national sales manager of PT Garuda Mataram Motor, the licensed Volkswagen distributor in Indonesia, earlier said that Volkswagen would not consider producing cars here for the time being due to low sales.

Last year, Volkswagen sold 57 vans in Indonesia, down from 91 in 2005.

Mercedes Benz led the premium automotive market last year on 692 cars, followed by BMW on 600, Audi on 90, Volvo on 69 and Jaguar on 27.

Source: Xinhua