Arun to cut LNG output by 37% from April
Arun to cut LNG output by 37% from April
SINGAPORE (Bloomberg): PT Arun, Indonesia's second largest
liquefied natural gas producer, said the company will cut LNG
output 37 percent to 18 million cubic meters a year from April
because of a decline in reserves at its Arun gas fields.
"We are cutting back because of a natural decline in gas
resources," said Ariffin Nawawi, president of P.T. Arun.
The company is a joint venture, with Exxon Mobil Corp. owning
35 percent and PT Pertamina, Indonesia's state-owned oil
monopoly, 55 percent. Shipments to Japan account for 80 percent
of sales.
Aceh, located at the northwestern end of Sumatra island and
home to nearly 4 million people, supplies an estimated 30 percent
of Indonesia's total oil and gas exports and 11 percent of the
country's total exports. The province is demanding a referendum
on independence from Indonesia, which would reduce Jakarta's oil
revenue.
Ariffin said unrest in Aceh is not the reason for the output
cut at the Arun field in the province. Clashes between troops and
rebels in Aceh last week left at least 15 people dead and eight
injured, reports said.
"It's between the army and the guerrilla to sort out their
differences and our LNG business has not been affected," said
Ariffin. Exxon Mobil's efforts at finding more gas at the Arun
fields, though, have slowed because of the unrest, Ariffin said.
Indonesia, the world's biggest LNG producer, sells a daily
average of 700,000 barrels of oil and 4.3 billion cubic feet of
natural gas abroad -- mainly to Japan, South Korea and Taiwan --
worth more than $7 billion last year.
Japan's LNG buyers, the world's biggest, want suppliers to cut
prices and shorten duration of contracts from the existing 20-
year terms as a global glut in LNG gives more leverage in price
talks.
Japan's utilities bought 54 million metric tons of LNG worth
$7 billion in 1998 from Indonesia, Malaysia, Brunei, Australia,
Alaska and the Middle East to meet 22 percent of its energy
needs.
Only nuclear energy, that fires 33 percent of Japan's power
plants, surpasses LNG as a fuel for the world's second-largest
economy.