Govt doubts ExxonMobil's goodwill

JAKARTA (JP): President Abdurrahman Wahid on Friday expressed suspicion that ExxonMobil temporarily closed its gas fields at Arun, in restive Aceh province, to exert pressure on the government to renegotiate its contracts for better terms.

Abdurrahman told Muslim worshipers at a mosque that he learnt of such suspicions from senior government officials, but he declined to elaborate.

"But we should not read too much into this and exaggerate these suspicions as they are merely suspicions," the President added.

He said the suspicion regarding ExxonMobil was one of the two major problems the government currently faced in Aceh.

The other issue is the Free Aceh Movement (GAM), which according to Abdurrahman, can be solved through negotiations.

Abdurrahman's controversial remarks seemed to implicitly reinforce Pertamina president Baihaki Hakim's statement on Thursday that the state oil company might take over the operations of the Arun gas fields if ExxonMobil did not reopen them by July.

However, Baihaki denied on Friday ever making such a threat toward the American company.

ExxonMobil also flatly denied the suspicions aired by the President, asserting that it had been forced to close the gas fields two weeks ago for safety and security reasons, following the cumulative impact of dozens of incidents.

"It is not true that we would do that. Under the contract it's Exxon that operates the fields," a senior Pertamina official involved in talks with Exxon to get the fields reopened, was quoted by Reuters as saying.

"We can only help and work with Exxon," he said, adding that no decision had yet been made on resuming production.

Separately, ExxonMobil's spokesman Bill Cummings said the overriding reason for ExxonMobil's difficult decision in suspending onshore production operations in Aceh was the safety and security of its employees, contractors and adjoining communities.

The closure of the economically vital fields, the first such problem since the start of their operations in 1977, has stopped production at Aceh's PT Arun NGL liquefied natural gas (LNG) plant, the country's second largest after the Bontang LNG plant in East Kalimantan.

Indonesia is the world's largest LNG exporter and its main customers are Japan, South Korea and Taiwan.

The military has said it would send fresh troops to the province to help bolster security at the gas fields. It was unclear if those soldiers were already in place.

Pertamina, which supplies LNG to South Korea and Japan from the Arun field, claims it has lost US$10 million since the closure and could lose $100 million by April if operations remain suspended.

ExxonMobil's contract with Pertamina dates from the mid-1970s and gives the U.S. company the right to operate the field and get 30 percent of revenues from gas sales. Pertamina takes 70 percent of revenues under a standard production-sharing contract in natural gas development.

The Arun NGL plant, which sells its LNG to Japan and South Korea, is owned by a joint venture between Pertamina, with 55 percent equity, ExxonMobil with 30 percent and Japan Indonesia LNG Co. with 15 percent.

Since the closure of its Aceh operations, Pertamina has begun to source additional LNG from its Bontang plant in East Kalimantan. (byg)