Arun runs out of gas; LNG exports halted

Arun runs out of gas; LNG exports halted

JAKARTA (JP): The Aceh-based liquefied natural gas (LNG)
producer PT Arun NGL Co has completely ceased its liquefied
exports because its natural gas supplies are now only capable of
fueling the company's power generators, an official at state oil
and gas company Pertamina said on Friday.

Spokesman for Pertamina's production-sharing management
directorate Sidick Nitikusuma said that PT Arun had run out of
natural gas stocks for future shipments.

"Arun is receiving just enough gas to keep its machines
running," Sidick told The Jakarta Post.

Since 1978, the Arun plant has never experienced an
interruption in its LNG exports to Korea and Japan, a feat that
has established Indonesia's reputation as a reliable LNG
supplier.

The Arun plant stopped its LNG shipments after its only
natural gas supplier, the American-based ExxonMobil Oil Indonesia
Inc., suspended operations one week ago.

ExxonMobil suspended the pumping of natural gas after
experiencing security problems with members of the Free Aceh
Movement (GAM).

The company was initially expected to resume operations within
a week after closing down on March 9.

However, with deteriorating security conditions, ExxonMobil
instead evacuated its workers, leaving only a skeleton staff to
perform maintenance duties.

Sidick said that Arun loaded its last LNG cargo, carrying
about 125,000 metric tons of LNG for Japan, on Monday.

This week, Arun was expected to load a second shipment bound
for Korea, he said, but the vessel, Golar Spirit, turned down the
job because of security concerns.

The vessel would instead sail for the Bontang LNG plant in
East Kalimantan to load its cargo for Korea, he said.

The government decided to divert the LNG supply from Arun to
the Bontang plant as a measure to stall a complete halt in LNG
exports.

Korea has already begun seeking LNG supplies elsewhere,
fearing that ExxonMobil's closure would drag on for several
months.

Malaysia and Australia have expressed their readiness to
substitute Indonesia's LNG exports if Bontang's supplies are
exhausted.

But it also remains unclear whether Bontang is prepared to
facilitate loading of the Golar Spirit with LNG.

An official at Pertamina said Bontang was prepared to take
over the Arun LNG shipments.

Sidick added that the Bontang NGL plant could cover Arun's
unfulfilled LNG export orders for one month at the most.

Bontang has a production capacity of approximately 22 million
metric tons of LNG per year, compared to Arun's LNG output of 11
million tons.

ExxonMobil Oil spokesman Julia Tumengkol said that natural gas
output has dropped to 350 million cubic feet of gas per day, down
from 1.6 billion cubic feet of gas per day.

The only gas field still operating, she said, was the North
Sumatra Offshore, because no GAM forces threatened operations
there.

She said the other three gas fields, Arun, Lhoksukon, and
Pasee, remained closed.

"So far there is no change in developments," she told the
Post.

Sidick was also skeptical about ExxonMobil resuming operations
soon, given that military operations against the local rebels
have yet to begin.

He said that several Indonesian armed forces officers had
recently met Pertamina and ExxonMobil officials to roughly
outline the security measures to be taken against GAM.

The army, he said, would send more soldiers, equip them with
armored vehicles and deploy anti-guerrilla troops to suppress the
rebels.

But Pertamina and ExxonMobil remained unconvinced, he added.

"The military said that it would be safe to resume operations,
but we wondered how that could be possible with all the GAM
forces still roaming around the area," he said.(bkm)