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TOKYO -- An Indonesian plan to scale back sales of liquefied natural gas to overseas buyers has prompted new concerns about the availability of LNG in Asia and could portend more struggles over one of the world's fastest-growing sources of energy.

LNG is natural gas that is cooled into liquid form so it can be transported more easily over long distances, especially where pipelines don't exist. The fuel has become far more important in recent years, especially in Asia, as power companies and others switch to natural gas as a cleaner-burning alternative to coal and oil.

Indonesia is the world's biggest LNG supplier. But at a time when LNG supplies are getting tighter all over the world, Jakarta has said it will begin curbing shipments to Japan and possibly other countries to make more gas available for its own energy needs.

Indonesia hasn't decided how much gas it will withhold, and the cutbacks likely won't take effect until 2010, when current large, long-term purchase agreements between Japan and Indonesia expire. President Susilo Bambang Yudhoyono said late last month that the government wouldn't cut all exports and would honor its existing sales contracts. But "there will be a policy change," he said. "More gas will be supplied to domestic industries."

Years of Planning Needed

The announcement is already causing ripples of concern. Japan is the world's largest LNG importer and relies heavily on Indonesian LNG to fuel its utility sector. The prospect of losing Indonesian gas is forcing Japan to look elsewhere, pursuing resources that would otherwise be available for the U.S., Europe, China or South Korea.

Moreover, years of planning -- and billions of dollars of investment -- typically are needed to add more LNG production. That means any expected shortfalls would have to be addressed soon to keep prices, which have climbed significantly in recent years, from going higher.

"If [Indonesia] walks away...where does that future supply come from?" says Frank Harris, an LNG specialist at energy consultancy Wood Mackenzie in Scotland. "I think people are now accepting that the seller's market [in LNG] will persist for the foreseeable future because of all this supply uncertainty."

Word of Indonesia's plans comes amid unease about other big energy suppliers. Russia is engaged in hardball negotiations with European customers; Bolivia's new president has pledged a big state role in developing and selling the Andean nation's considerable reserves; and Iran faces the threat of sanctions that could disrupt exports of its huge oil and gas output. Unrest in other producer nations has only added to the jitters.

Mr. Harris and other analysts point out that other countries -- notably Qatar and Australia -- are moving to boost LNG production and that Japanese companies have signed deals to source more gas from Australia and elsewhere. Some analysts even believe there could be an oversupply of LNG in the next decade once some of the new projects are completed.

It isn't clear how quickly those projects can be finished, and some have faced delays because of soaring costs and environmental concerns.

Japan imported an estimated 58 million metric tons of LNG last year, or about 41% of the world's total. It is expected to need as much as 69 million tons a year by 2011.

More Nations Plan Terminals

Other countries, including the U.S. and China, are planning to build more LNG port terminals. Developers of such terminals typically sign long-term supply agreements with gas providers to ensure the facilities are fully utilized -- so as more terminals are developed, demand should increase further.

All that could make Indonesian gas even more vital. Indonesia accounted for an estimated 17% of global export demand last year. But it has been having trouble meeting its commitments to buyers, and some of its gas fields are in decline. Meanwhile, the country's domestic demand is rising rapidly. Indonesian gas demand is on track to climb 13% from 2005 to 2010, says Purvin & Gertz, an energy consultant based in Houston, Texas.

There are also powerful political reasons for Indonesia to hoard gas. Indonesia became a net oil importer for the first time in 2004. Many Indonesians blame expensive foreign oil for driving up inflation and slowing the country's economic growth. Some politicians believe keeping more natural gas instead of exporting it could help ease those tensions. Indonesia "really needs some more domestic energy to stay at home," says Kurt Barrow, an analyst at Purvin & Gertz.

Even so, "I would question whether [redirecting LNG] is the best solution," he says. Doing so would require the construction of costly pipelines or more LNG terminals at home so the gas can be delivered to domestic demand centers, including Jakarta, the capital.

Redirecting Indonesia's LNG bounty would also risk upsetting Western oil companies in the region. Much of the country's gas is produced at two major fields by Western companies including France's Total SA, Chevron Corp. of San Ramon, Calif., and Exxon Mobil Corp. Irving, Texas.

Price Is Better in Japan

Those companies bring the gas out of the ground and sell it to the Indonesian government, which then converts it to LNG and decides how to market the gas.

"Many people, including us, would prefer to be selling the gas to Japan -- because you get a better price for it," said a Western oil-company employee, who declined to be quoted by name because of concerns about upsetting the Indonesian government. Most oil-industry executives suspect Jakarta would sell LNG at a discount at home because Indonesians wouldn't be able to afford full international prices.

Chevron, for its part, plans to make sizable investments to boost gas production off the coast of the Indonesian-controlled portion of Borneo, known as Kalimantan. Nicole Hodgson, a spokeswoman for Chevron in Bangkok, Thailand, said "Chevron recognizes Indonesia's need to increase gas to the domestic market." But she added that "export-level pricing is probably what's going to be required" to make the company's newest developments worthwhile.

Publicly, Japan's buyers say they will find other sources to replace any shortfall. "We are increasing contracts with countries other than Indonesia," says Kiyoshi Sakiyama, a spokesman of Osaka Gas Co. Ltd., which relied on Indonesia for nearly half its 6.5 million tons of LNG imports in its latest fiscal year ended March 31, 2005.

But people familiar with the companies' thinking, including Japanese government regulators, say privately that importers still worry about where their future gas supplies will come from and if new LNG projects will be developed in time to meet their needs.