Bontang to cover for Arun exports

Bontang to cover for Arun exports

JAKARTA (JP): The Bontang liquefied natural gas (LNG) plant in
East Kalimantan would substitute for LNG exports to Japan and
South Korea, as gas supplies to the Arun LNG plant in Aceh have
been disrupted due to security concerns, the government said on
Monday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said Bontang's excess capacity would allow it to replace Arun's
LNG exports, should the latter run out of natural gas supply.

"It's our commitment to continue the LNG supply to Japan and
Korea," Purnomo told reporters in a press meeting.

Natural gas supply to Arun has come to a virtual halt since
Friday last week, after American-based oil and gas company
ExxonMobil Corp. temporarily closed its operations due to
security threats from rebel forces in Aceh.

Even though ExxonMobil can still maintain some of its gas
supply to Arun from the still-operating North Offshore Sumatra
gas field, that alone will not be enough to meet Arun's feedstock
capacity.

Arun's LNG exports have not been interrupted yet. But the
plant's supply may last for only about one or two weeks, state
oil and gas company Pertamina said earlier.

The situation threatens to cut LNG exports to Japan and Korea,
two of Indonesia's largest LNG importers.

Purnomo said if Arun ran out of gas supply, Bontang can take
over the LNG exports and maintain supply to Japan and Korea
for a "couple more weeks".

The Bontang LNG plant produces about 22 million metric tons of
LNG per year, compared with Arun's annual LNG output of around 11
million tons.

"Should security conditions not improve by then, we may need
to ask other LNG producers to make up for the shortfall in the
exports," Purnomo continued.

He said that Indonesia may ask LNG producers in Malaysia and
Australia to stand by to help out Japan and Korea maintain their
LNG supply.

"This week, we will send a Pertamina team to Malaysia," he
said.

Purnomo denied reports that Pertamina had announced force
majeure as a result of ExxonMobil's operation closure.

"We're still supplying LNG, we haven't announced force
majeure," he explained.

Newswire Reuters quoted an unnamed Pertamina official as
saying on Sunday that the state company declared force majeure to
Japan and Korea.

Separately, Reuters reported from Seoul on Monday that Korea
had begun seeking LNG emergency supplies from other countries.

Korea's Ministry of Commerce, Industry and Energy said that
Malaysia, Brunei, Australia and the Middle East were all being
approached as possible alternative supply sources.

"We have asked through our foreign ministry to contact their
counterparts in Malaysia, Brunei, Australia, Oman, Qatar for the
purpose of seeking emergency supplies in case Pertamina has
problems providing supplies," the ministry said in a statement.

It also said that South Korea had asked Indonesia to ship gas
from the Bontang LNG plant as soon as possible to meet their
April requirement.

"We are very concerned about the situation in Aceh. We will
have to continue seeking alternative supply sources if the
problem there is not resolved soon." a ministry official said.

Pertamina has long term contracts to export 5.4 million tons
of LNG to South Korea's sole LNG importer, state-run gas firm
Korea Gas Corp. (KOGAS).

Indonesia is South Korea's largest supplier, with Arun alone
providing 3.4 million tons.

The Arun LNG plant is jointly operated by Pertamina and
ExxonMobil, and makes some 225 shipments a year with total
earnings of more than US$1.8 billion. (bkm)