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.