Arun in operation again by end of July: Pertamina

JAKARTA (JP): State oil and gas company Pertamina said on Monday it expected natural gas output from the Arun gas fields in Aceh to resume output at 25 percent of normal levels within two weeks, expecting to recover to full capacity by the end of July.

"I am optimistic that within two weeks we can resume initial gas production to at least one quarter of maximum capacity," Pertamina President Baihaki Hakim was quoted as saying by Reuters while attending an oil conference in Kuala Lumpur, Malaysia.

"And then we need one month before full production," he added, "so we are talking about the end of July."

Meanwhile, Pertamina management production sharing director Iin Arifin Takhyan said American oil and gas company ExxonMobil Oil Indonesia Inc. would dispatch a team to Arun this week.

The team, he said, would assess Arun's condition before setting a date for the resumption of normal operations.

"They told us that security conditions were now acceptable," he said on the sidelines of a hearing with the House of Representatives' Commission VIII which oversees energy affairs.

Iin also confirmed that ExxonMobil had agreed to resume full operations.

ExxonMobil officials were not available for comment.

The company has suspended operations in Arun since mid-March due to security disturbances from armed groups, believed to be local rebel forces.

Its shutdown caused the nearby Arun liquefied natural gas (LNG) plant to also halt production, threatening the country's LNG supplies to Japan and South Korea.

Currently, Pertamina covers the shortage using excess production capacity at its Bontang LNG plant in East Kalimantan.

Iin said that an ExxonMobil team assessing Arun's security situation returned last week, concluding that security in the area had improved.

This week, he said, ExxonMobil would dispatch another team to evaluate the condition of its gas facilities.

"After that, they will know what must be repaired; then they can then decide when to resume normal operations," he explained.

Iin said the team would need another five days to complete the examination of its gas facilities.

He estimated that repair work at the gas facilities may take less than three weeks to complete.

"It is expected that by the end of July, or in the third week of July, ExxonMobil can resume normal operations," he said.

ExxonMobil's decision to resume operations comes after Pertamina president Baihaki issued the company with an ultimatum to commence production preparations.

Baihaki said he demanded ExxonMobil start preparations by Friday this week for the resumption of operations at its Arun plant.

Iin declined to say whether ExxonMobil's willingness to return to Arun had been a result of the ultimatum or their own initiative.

He said that ExxonMobil would start operations at two of the three gas field clusters in the area. The two clusters, he said, would produce about 150 million cubic feet of gas per day.

At present, only ExxonMobil's North Shelf Offshore (NSO) gas field is operating, mainly because it remains safe from security threats.

Natural gas streaming from the NSO field is sufficient to fuel power generators at the Arun LNG plant.

Later, Iin said, ExxonMobil would raise NSO's gas output to allow it to supply natural gas to two nearby fertilizer plants.

The plants, PT Pupuk Iskandar Muda and PT Asean Aceh Fertilizer, were also forced to suspend operations.

"Each (of the fertilizer plants) will receive about 50 million cubic feet (of gas)," he said.

Meanwhile, Pertamina said it was eying a deal to refine 50,000 barrels-per-day (bpd) of crude in Thailand under short-term contracts.

"In the short term, we are talking about 50,000 bpd ... three months first," Baihaki was quoted as saying by Reuters. (bkm)