Indonesia guarantees LNG exports to Korea, Japan despite Exxon closure

Published March 12th, 2001 - 02:00 GMT

Indonesia will guarantee a smooth flow of liquefied natural gas (LNG) to South Korea and Japan despite Exxon Mobil's decision to halt production in troubled Aceh, a minister said Monday. 

 

"We will not declare a force majeure because we remain committed to supply LNG to our customers," Energy and Mineral Resources Minister Purnomo Yusgiantoro said. 

 

His comment came after an official of the state oil and gas company, Pertamina, was quoted saying a force majeure had been declared on PT Arun's production, meaning the company would not be able to meet its LNG shipment obligations due to a shortage of raw material from Exxon Mobil due to the security situation in Aceh. 

 

"There is no force majeure, that I deny, because we will continue to honor our commitment regarding supplies to our consumers," Yusgiantoro said before attending a cabinet meeting to discuss planned fuel prices hikes. 

 

To fill the gap the government would seek supplies from other domestic refineries or from other countries, he said. "We will continue our supply, whether from (East Kalimantan's) Bontang (field) or from other supplier countries, such as Malaysia and Australia," Yusgiantoro said. 

 

"We have had communications with Malaysia and Australia, we will ask for their assistance in supplying our consumers," he said.  

 

Such mutual assistance schemes were usual, he said, and Indonesia had in the past helped out when its two neighbours faced production problems of their own. He did not elaborate. 

 

PT Arun LNG Co, a major exporter of liquefied natural gas to Japan and South Korea, officially stopped operations Saturday, a firm spokesman said, quoted Sunday, 

 

"We have to halt production because the supply of gas as raw material from Exxon Mobil has totally stopped," firm spokesman Rustam Effendi said. 

 

PT Arun, which employs more than 1,400 workers, and has another 2,400 contractors, is 55 percent owned by Pertamina, 35 percent by Mobil Oil Indonesia Inc, and 15 percent by Japan-Indonesian LNG Co. 

 

Exxon Mobil, which operates three oil and gas fields in North Aceh -- in South Lhoksukon, Arun and Pase -- and supplies several other major companies in the area with gas and condensate, halted production Friday over security concerns. 

 

Exxon Mobil operates in an area of North Aceh where violence is common between government forces and the Free Aceh Movement (GAM), which has been fighting for a separate Islamic state since the mid-1970s. 

 

Exxon Mobil sites have been the scenes of fighting. Staff have been kidnapped and threatened, vehicles burned and shots have been fired at the company's chartered airplanes. Yusgiantorio said the military had been sent in to protect production sites. 

 

"We have already sent two battalions there ... we will ask for several more," he said. "So we hope that in a few days, there should be security at the production centers."  

 

Exxon Mobil Indonesia spokesperson Julia Tumengkol told AFP the company was "working closely with Pertamina" and production would be resumed whenever "the time allows us to do so." 

 

The company's move to halt operations in several of its fields has led industries in the area to stop production because of a lack of fuel or raw material. On Friday, fertilizer plants PT Pupuk Iskandar Muda and PT Asean Aceh Fertilizer halted production. Paper plant PT Kertas Kraft Aceh is also said to be facing difficulties.—AFP. 

©--Agence France Presse 2001. 

 

 

© 2001 Mena Report (www.menareport.com)

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