Govt doubts ExxonMobil's goodwill

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)