State-run oil and gas company PT Pertamina is currently negotiating the extension of its natural gas supply contracts with a number of gas companies in Japan, according to its Chief Ari Soemarno.

Soemarno said Japan had asked Indonesia to guarantee the continuity of its energy supply, which Japan needed to keep its industries in operation as well as to meet the need of its public activities. Most energy contracts between Indonesia and Japanese companies are due to end in 2011, while Indonesia had hinted it intended to reduce its gas exports to Japan in order to meet increasing domestic demand.

The results of the negotiations with the Japanese gas companies would be reported to Energy and Mineral Resources Minister Purnomo Yusgiantoro, who would arrive in Tokyo for a visit soon.

After signing an agreement to provide funds for the rehabilitation of an Indonesian school in Tokyo, Soemarno commented, “Pertamina`s vice president director is now in Osaka for the negotiations. We don`t know the results yet, maybe we will tomorrow.”

The Japanese had recently been startled by a statement from Vice President Jusuf Kalla that Indonesia was now prioritising its own need for gas rather than meeting overseas demand. Kalla had also indicated however, that Indonesia would continue to supply LNG to Japan based on existing contracts until 2011 - provided domestic demand for gas had been met.

According to Kalla, Indonesia had envisaged the realisation of three things for the continuation of natural gas supply to Japan, the first being the opening of new gas fields in Natuna and Papua. The second would be increasing the efficiency of gas-consuming industries, and the third the relocation of LNG-consuming industrial activities in Japan to Indonesia.

“If these three things can be implemented, LNG supply to Japan can be maintained in accordance with the contracts between the two countries,” Kalla said.

Japan, along with South Korea and Taiwan, is Indonesia’s traditional LNG market and in 2005 had met around 24% of Japan’s need for LNG. At least six Japanese gas companies are believed to be currently negotiating with Pertamina to renew LNG purchasing contracts.