INDONESIA TENSIONS WORRY ENERGY BUYERS

INDONESIA TENSIONS WORRY ENERGY BUYERS

Amid the turmoil in Indonesia, some customers are getting antsy about energy supplies.

Indonesia is the world's largest exporter of liquefied natural gas at 25 million metric tons a year. About 60 percent goes to Japan, with South Korea and Taiwan the other mainstay customers.The United States is virtually unaffected by the problem directly, but U.S. trade with Asia could suffer if the economies of Indonesia's neighbors can't obtain adequate energy supplies.

South Korea, which imports all of its oil and gas, is ''on alert'' in case of disruption of supplies, a government spokesman said Tuesday. Korea gets over half its LNG from Indonesia. Imports last year were valued at $1.32 billion worth of liquefied natural gas and $844 million of crude oil, figures from the Ministry of Trade, Industry and Energy show. By volume, those purchases represented 57.7 percent and 4.7 percent of the nation's LNG and crude imports. South Korea has long-term supply contracts, as are common in the industry, and officials say that militates against trying to find an alternative source. In addition, eight Korean companies are involved in energy development projects in Indonesia, led by state-run Korea Petroleum Development Corp. Overall, the firms have invested $550 million in 13 exploration projects.

Pohang Iron & Steel Co., the country's largest steel maker, has just arranged a $300 million loan at preferential rates from Japan's Export-Import Bank to built an LNG terminal. Posco, as the firm is known, earlier announced plans to switch its fuel to natural gas from oil or coal.

LET'S MAKE A DEAL

In return for the loans, the bank proposed establishment of a joint venture between Posco and Japanese firms to construct the storage tank.

Posco plans two tanks, each with storage capacity of 1.2 million tons of LNG a year at Kwangyang by the year 2002.

In Taiwan, officials say there has been no disruption so far. A spokesman for state-run Chinese Petroleum Corp. said the government-owned company is closely watching the situation.

Lee Chung-lung, an LNG plant manager for CPC, said executives have been in touch with Indonesia's state-owned oil company Pertamina, but were not advised of any changes in shipping schedules.

Indonesia accounts for 48 percent of LNG imported by Taiwan.

Pertamina was scheduled to send officials to Taiwan early next month to attend a regular meeting between the two companies. The spokesman said he'd not been notified of any change in that program.

CARRIERS ARE COMING

An Indonesian LNG carrier arrived at Kaohsiung in southern Taiwan last week and another is due May 23.

CPC's original contract with Pertamina called for the purchase of 1.5 million metric tons a year. A revision last year doubled the quantity.

The Taiwanese firm, the island's only energy producer, also buys about 2.25 million tons of LNG a year from Malaysia.

Malaysia exports 15 million tons of LNG a year, but expects that to rise to 22 million tons by 2001 with the completion of a third production facility.

Singapore just completed a study on the feasibility of importing LNG to augment the piped gas it buys from Malaysia. No decisions have yet been made, but the cost of a receiving terminal is estimated at $5 billion.

One of the world's largest companies involved in liquefied natural gas transport is Japan's Mitsui O.S.K. Lines, which operates 37 of the global fleet of 127 LNG carriers.

Under an agreement with Pertamina begun in 1989, the line has been transporting 8.2 million tons of LNG annually from Indonesia to Japan, the world's biggest importer.

Japan is prime buyer

Japan takes over 60 percent of world LNG supplies, nearly all sourced within the region, including Australia and Brunei.

Earlier this year, Mitsui O.S.K. cut a deal to acquire 50 percent equity in the transport project held by London-based Burmah Castrol PLC. With conglomerate Nissho Iwai Corp. as a partner, the shipping line will control 75 percent of the venture. The current shareholders - Burmah MOL Transport Ltd., Burmah LNG Shipping Ltd. and Burmah Investment Ltd. - will become Mitsui subsidiaries. Using eight vessels with capacities of 4.3 million cubic feet, the project was the first and remains the largest transport contract on Indonesia-Japan routes. Mitsui recently secured an extension with Pertamina to 2010.

Marketline International Ltd., a London-based consultancy, forecasts that Asia's LNG consumption will triple by 2015. ''The main importer will continue to be Japan, although South Korea and Taiwan will account for an increasing proportion.''