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.