Arun to resume gas production later this month

JAKARTA (JP): More than three months since pulling out from the Arun gas fields in Lhok Sukon, Aceh, PT ExxonMobil Oil Indonesia has returned as part of a joint team with state oil and gas company Pertamina.

The team will lay the groundwork for the resumption of operations, which is expected some time late this month.

ExxonMobil spokeswoman Julia Tumengkol said on Monday her company and Pertamina had deployed a technical team to access the physical condition of the Arun gas facilities.

"We have started the deployment of technical experts to access conditions and the operability of the Arun facilities and equipment," Julia said in a statement.

She said the team, comprising ExxonMobil and Pertamina employees, and local contractors, was sent to Arun during the weekend.

"Assuming that security conditions permit, we are planning to restart production in phases," she said without elaborating.

The fixed schedule will be worked out based on input from the technical team, she explained.

ExxonMobil remains tightlipped over when the company hopes to restart production, saying nothing would be clear until the security situation had improved.

"All efforts are being made to bring the Arun field back into gas production as soon as possible," Julia added.

Pertamina said earlier it expected ExxonMobil to resume gas production by the end of this month or in early July.

Repair work is estimated to take three weeks, after which gas is expected to start flowing to the nearby Arun liquefied natural gas (LNG) plant.

Pertamina hopes to see enough gas flowing into the Arun LNG plant to allow it to operate at 50 percent of its capacity before rising to 100 percent by the end of July. The Arun plant operates four LNG trains.

ExxonMobil abandoned its Arun operation in mid-March due to increasing harassment from armed groups, believed to be members of the Free Aceh Movement.

The company has been resisting government pressure to return to restive Aceh, saying that security was its number one concern.

But earlier this month Pertamina gave ExxonMobil an ultimatum to take "concrete action" toward the resumption of Arun gas production, or Pertamina would take over the operation.

ExxonMobil was given one week to send a team to Arun and begin repair work at the site. It remains unclear whether ExxonMobil's return to Arun was the result of Pertamina's ultimatum.

A senior Pertamina official has said ExxonMobil had already agreed to return to Arun by the time Pertamina delivered its ultimatum.

He said a security team returning from Arun late last month concluded the security situation there was favorable for a return.

"Overall, the situation in the Arun area of operation has improved," Julia said.

Aceh is the scene of fighting between government troops and the Free Aceh Movement.

This year alone, hundreds have been killed in Aceh, most of the victims civilians. ExxonMobil evacuated its staff following a string of mortar attacks on its compound. The company also reported extortion by armed groups, and said its supply plane had often been fired on.

Julia declined to reveal the losses incurred by ExxonMobil since it left Arun. "We haven't calculated that figure yet."

Arun supplies LNG to Japan and South Korea. Its buyers are Japan's Tohoku Electric Power Co., and South Korea's Korea Gas Corp. and Korea Electric Power Corp.

At full capacity, Arun's LNG exports earn Indonesia about US$100 million a month.

Indonesia is currently making up for the cessation of operations at Arun with excess LNG from the Bontang LNG plant in East Kalimantan.

It is feared that the excess LNG from Bontang will be exhausted by the end of July, when LNG demand is predicted to outstrip Bontang's capacity.

Aside from exporting LNG, ExxonMobil's Arun gas fields also supply natural gas to nearby fertilizer companies.(bkm)