Govt mulls transferring gas to Aceh
Govt mulls transferring gas to Aceh
Fitri Wulandari, The Jakarta Post, Jakarta
The government is considering taking liquefied natural gas
(LNG) from Bontang LNG plant in East Kalimantan to cover the
export commitments of Arun LNG plant in Aceh for the next three
years to resolve the lingering natural gas shortage suffered by
fertilizer firms in Aceh.
Under the plan, natural gas from ExxonMobil Oil Indonesia's
(EMOI) gas field will be supplied to three Aceh-based fertilizer
firms, which for the past several months have suspended
operations due to the shortage of gas. EMOI is the sole natural
gas producer in Aceh and its output has largely been dedicated to
Arun for LNG production. (EMOI's supply contract with the
fertilizer firms had previously ended in line with declining
reserves at its gas field).
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said that to fulfill the export commitments of Arun, it may take
a total of 54 LNG cargoes from Bontang from 2005 to 2007.
"By taking LNG from Bontang to meet Arun's commitment to
foreign buyers, the natural gas (from EMOI) can be delivered to
fertilizer firms," Purnomo told reporters after a limited Cabinet
meeting on Thursday.
However, Purnomo said the government was still studying the
feasibility of the plan especially as Bontang may also need to
supply LNG to U.S.-based energy company Sempra and Korean steel
company Posco to cover the export commitment of the Tangguh LNG
plant in Papua as the construction of the country's third LNG
plant will only be completed in 2007.
Posco has clinched a deal to buy 600,000 tons of LNG from
Tangguh, while Sempra will buy 3.7 million tons both starting in
2007.
Purnomo said that the shift of the export contracts from Arun
to Bontang would cost the government around US$100 million per
year to cover the price difference between the LNG dedicated for
export and the domestic market.
He added that fertilizer firms in Aceh were expected to have
normal natural gas supply in 2008 when the Block A gas field in
Lhokseumawe, Aceh, operated by U.S. gas firm ConocoPhillips
starts production.
Activities at the three Aceh fertilizer companies: PT Pupuk
Iskandar Muda (PIM) 1, PT PIM 2 and Asean Aceh Fertilizer have
been suspended for several months due to the gas supply problem.
EMOI has seen its gas reserves declining during the past few
years. This has also affected the operation of Arun as it now
only operates four trains out of 6 trains in Lhokseumawe.
At the moment, the government is importing LNG from other LNG
producers to meet its commitment to Arun's LNG buyers and send
some of the natural gas from EMOI to PT PIM 1.