Indonesia was the world's largest producer and exporter of liquefied natural gas. Two major facilities, P.T. Arun at Lhokseumawe, Special Region of Aceh, and P.T. Badak, in Bontang, Kalimantan Timur Province, condensed natural gas through refrigeration to one-six hundredth of its volume for shipment in tankers. Both facilities were built in the late 1970s under supply contracts to Japan, although excess production was shipped to other destinations. After several expansions, the total capacity had reached 22.6 million tons per year by 1990. Exports of liquefied natural gas in 1990 were 20.6 million tons, valued at US$3.7 billion.
Although most of Indonesia's natural gas was supplied to liquefying plants for export in the early 1990s, about 20 percent was used for domestic consumption, primarily in fertilizer plants, where it was processed into ammonia and urea. Natural gas reserves were estimated in 1990 at 67.5 trillion standard cubic feet of proven reserves and 12 trillion standard cubic feet of probable reserves. Growing domestic and export demand encouraged plans for the development of the Natuna gas field, the nation's largest field, located in the South China Sea northeast of the Natuna Islands. The high carbon dioxide content of this field had previously deterred investment, but Esso Indonesia indicated willingness to invest US$12 billion to $US15 billion to treat and market the gas. Pertamina authorized further negotiations with Esso after reviewing the proposal in 1991.
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