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)