Govt reviewing Arun LNG shipment to secure domestic gas supply
Govt reviewing Arun LNG shipment to secure domestic gas supply
Fitri Wulandari, The Jakarta Post , Jakarta
The government will review the shipment of liquefied natural
gas (LNG) from Aceh to foreign buyers in order to tackle gas
shortages at the province's fertilizer firms.
Dipo Alam, deputy to Coordinating Minister for the Economy,
said the government is likely to reschedule LNG shipments from
the province to foreign buyers so that fertilizer firms can
obtain gas supplies, starting this month.
"The government guarantees that fertilizer plants can maintain
production this year. We shall ensure that domestic gas supplies
will still be available," Dipo told a media briefing on
Wednesday.
Activities at fertilizer companies ASEAN Aceh Fertilizer (AAF)
and Pupuk Iskandar Muda (PIM) have been disrupted for several
months due to shortages of gas supplied by Exxon Mobil Oil
Indonesia (EMOI), the only gas producer in the province.
EMOI, which for decades supplied both plants and the Arun LNG
plant in Lhokseumawe, has seen its gas reserves much depleted
over the past few years.
The country's oil and gas upstream authority, BP Migas, has
said EMOI can supply only 1.36 billion cubic feet per day (BSCFD)
this year and the supply will continue to drop to 0.8 BSCFD in
2007.
The low gas supply has also cut LNG production in Arun LNG
plant. At present, only four of six trains at Arun LNG plant are
operating.
AAF is jointly owned by the governments of Indonesia,
Singapore, Malaysia, Thailand and the Philippines, which are all
ASEAN members. PIM is a state-owned enterprise producing
fertilizers for Aceh and neighboring North Sumatra province.
Vice chairman of BP Migas Kardaya Warnika said EMOI had agreed
in principle to the review. However, he admitted that there have
been no talks with buyers in Japan and Korea.
To maintain gas supply in the long term, Kardaya said, the
government would swap LNG supplies from Arun with those from
Bontang, East Kalimantan, next year.
Thus, natural gas that would have been supplied to the Arun
LNG plant could be used for the fertilizer plants.
EMOI, according to Kardaya, did not have a problem with the
plan as long as the price for domestic gas was equal to the LNG
price for export.
The price of gas to fertilizer companies, which is subsidized
by the government to help farmers, now stands at around US$1.50
per million British thermal units (MMBTU), while the LNG price in
the export market hovers at around $3 per MMBTU.
Kardaya said BP Migas and the Ministry of Finance were still
calculating by how much the government would need to subsidize
the gas price from EMOI to fertilizer companies.