Total E&P Indonesie, (Total) said it may decrease gas output from its Mahakam block, offshore East Kalimantan, by 5% in 2009 with the hope of decreasing LNG demand from major Asian importers, media sources reported. The Mahakam block pumped 2.6 billion cubic feet of gas per day in normal conditions. Total is the operator of the block with a 50% share, Inpex Corporation (Inpex) holds the rest 50% stake.

“We might reduce production if we do not succeed to sell more gas to the spot markets. We hope that we don’t reduce a lot, maybe only about 5% of our average yearly production,” Elisabeth Proust, president director said.

“We will do the maximum not to reduce the production,” said Elisabeth, adding that present production was still being maintained at the normal level for the time being.

The Mahakam block currently supplies 80% of the gas for the Bontang liquefaction plant, which is being operated by PT Badak NGL.

Liquefied natural gas (LNG) from Bontang plant has been exported to Japan, South Korea, and Taiwan. Though, in the month of March 2009, state oil and gas firm PT Pertamina, a major shareholder in Badak, said the three countries might resell up to 12 LNG cargoes from Indonesia as domestic consumption shrinks, among the global economic downturn.

The cut in the gas flow may result in the future to decline in LNG demand from the Bontang plant, finally reducing the need for gas supply for the plant.

Head of LNG business at Pertamina Hari Karulianto said on March 2009 that the economic slowdown had indeed decreased the demand for the biggest Asian LNG importing countries.

President and director of the company said Total had taken several steps to tackle this problem. She said that another branch of Total and Pertamina had won a deal to sell one cargo of LNG to India.

“She added the companies were also trying to make an arrangement with BP, the operator of Tangguh gas field in Papua, to ship two cargoes of LNG to China if BP could not do so within the agreed schedule.”

“But, this is still under the discussion,” president and director said.

If Total and BP Plc agree on this swap arrangement, the first cargo to be shipped under it will be delivered in April 209, and one more on May 2009.

Total and Inpex intend to spend a total of $2.3 billion in 2009 on the operation of the Mahakam block.

“About $ 1 billion of this will go for the compressors and the remaining $800 million will go for the wells,” Elisabeth said.