Arun must resume operations soon: Govt

Arun must resume operations soon: Govt

SINGAPORE (Dow Jones): ExxonMobil Oil Indonesia Inc. must resume operations at its Arun gas field in the next few weeks in order to meet demand for liquefied natural gas in the peak demand summer season, Indonesia's Minister of Mines and Energy Purnomo Yusgiantoro told Dow Jones Newswires Monday in an exclusive interview.

"Buyers in South Korea and Japan need more (LNG) in the month of July because of summer season demand," Purnomo said, referring to high LNG consumption for power generation for air conditioning. "So (during) this month and June, (it is) critical to push ExxonMobil back to production."

The Arun gas field has a normal production capacity of 1.6 billion cubic feet a day of natural gas and 30,000 barrels per day (bpd) of condensate, which is liquefied by PT Arun NGL before being shipped to South Korean and Japanese buyers.

Purnomo said Pertamina and the Indonesian government are in discussions with ExxonMobil Oil Indonesia about restarting natural gas pumping in Arun.

ExxonMobil Oil Indonesia, a unit of Exxon Mobil Corp., halted natural gas pumping in Arun in March this year due to security concerns in restive Aceh province.

Purnomo said it would take about one month to prepare the facilities before Arun LNG output is at normal levels.

Purnomo said the ministry is prepared to approve a proposal by Pertamina to extend PT Caltex Pacific Indonesia's contract to operate the Coastal Plain Pekanbaru oil block by one year.

The contract expires in early August. PT Caltex is a joint venture between Chevron Corp. and Texaco Inc.

"We are ready to (extend the contract), because it's very important to bring production back to previous levels," he said.

Purnomo said production at the CPP block declined to 60,000 bpd from normal output of 70,000 bpd. Indonesia's total oil production is 1.46 million bpd, including condensate, Purnomo said.

Purnomo said the ministry hasn't yet received Pertamina's proposal on CPP but expects to receive it very shortly.

Pertamina and the Riau province government have yet to reach a final decision over the split in CPP shares and control of the block's operations.

Purnomo said he plans to visit China in July to discuss possible sales of natural gas from Irian Jaya's Tangguh field to China.

He said he didn't expect any final or formal agreements with China to be signed in July. "We are just going to have discussions with them at this point," he added.

Pertamina has said it is targeting to sell 1.5 million to 3 million metric tons of LNG from Tangguh to China.

Pertamina is eying development of Tangguh as its third multi- train LNG export center, after the Bontang and Arun gas fields.

Tangguh, located in the northwest part of Iran Jaya, will benefit from lower shipping costs because it is closer to its major Asian-Pacific customers than Bontang and Arun.