ExxonMobil signs Aceh gas deal
Zakki P. Hakim, The Jakarta Post, Jakarta
ExxonMobil signed on Friday an agreement that would secure the year's natural gas supply for fertilizer firms PT Pupuk Iskandar Muda I and II ((PIM-1, PIM-2) in Aceh as the country enters planting season.
The agreement, signed at the office of the Oil and Gas Implementing Body (BP Migas), allows oil and gas giant ExxonMobil Oil Indonesia to supply 57 million standard cubic feet per day (mmscfd) of natural gas to PIM-1 starting this week.
ExxonMobil is currently the sole natural gas producer in Aceh, and its output is largely converted into liquefied natural gas for the Arun LNG plant, which is then exported.
Another deal is expected to be signed in February or March to secure about 60 mmscfd of natural gas for PIM-2, BP Migas head Rachmat Sudibyo said.
The two deals should cover almost all of the firms' operational need of 120 mmscfd of natural gas.
"The contract is a result of the government's effort to meet the gas demand in Aceh, as well as to help recover the economy devastated by the recent tragedy," said Rachmat, referring to the massive quake and tsunamis that hit Aceh and North Sumatra last weekend, which has killed more than 100,000 people.
Lili Djadjuli, PIM-1 technical and development director, said the company expected to start receiving the supply on Tuesday.
The two firms have a combined annual production volume of about 600,000 tons of fertilizer, making them the largest suppliers for Aceh and North Sumatra.
Fertilizer firms in Aceh have been struggling to survive because of a gas shortage from depleted reserves.
PIM-1 has been operating at below 80 percent production capacity, while PIM-2 did not produce fertilizer in 2004.
PT ASEAN Aceh Fertilizer (AAF), another fertilizer firm, was closed down by the government last October because of the shortage.
The closure of AAF gave rise to fears that the other two fertilizer producers would follow suit and disrupt the national fertilizer supply.
Earlier this year, South Sumatra-based fertilizer maker PT Pupuk Sriwijaya (Pusri) was forced to provide about 21,000 tons of fertilizer to meet demand in the two provinces.