Japan LNG buyer relaxed despite Aceh uncertainty

Japan LNG buyer relaxed despite Aceh uncertainty

TOKYO (Reuters): Japan's Tohoku Electric Power Co Inc said on Monday it saw no immediate need to seek alternative liquefied natural gas (LNG) cargoes beyond September, despite uncertainty about the resumption of Indonesian supplies.

ExxonMobil Oil Indonesia Inc. said earlier on Monday that it was prepared to wait indefinitely for security conditions to improve before reopening three gas fields in the rebellious province of Aceh.

It was forced to shut down temporarily its fields in the province on the island of Sumatra in early March.

A spokesman for Tohoku Electric, Japan's fourth largest electric power utility, reiterated that the company -- the main Japanese buyer of Indonesian LNG -- was confident of being able to cover its LNG needs until September through term contracts, alternative supplies from Indonesia and spot purchases.

He said the company did not wish to make LNG purchases beyond September for fear of being saddled with more than it needed.

"We do not want to end up having more LNG than we need after the gas field reopens," he said.

State oil and gas company Pertamina said that Japan and South Korea had so far been very understanding.

"Japan knows that we have been a very reliable LNG supplier in the past, and that the security issue is beyond our control," said Pertamina president Baihaki Hakim.

ExxonMobil shut down its operations in March due to persistent security problems caused by armed groups believed to be members of the Free Aceh Movement (GAM). The disruption of production forced nearby liquefied natural gas (LNG) producer PT Arun NGL Co. which is co-owned by ExxonMobil and Pertamina, to stop its LNG production and exports.

Despite a military reinforcement of three battalions to guard the company's facilities, gunfights in the area still occur, dimming hopes for the company to resume its operations in the near future.

At present, Indonesia is covering the shortfall from PT Arun with supplies from the Bontang LNG plant in East Kalimantan.

But Pertamina warned that by June Bontang's excess LNG supplies will have run out, leaving the country to rely on other LNG producers like Malaysia or Brunei.

Pertamina's Baihaki said that this week he would meet LNG producers in Malaysia and Brunei to discuss the possibility of the two countries covering the LNG shortfall from PT Arun.

The move, however, may cost Indonesia a loss of around US$100 million a month in export revenues, according to Pertamina.

Baihaki said Pertamina and ExxonMobil were preparing for a limited operation of two LNG trains at PT Arun.

The measure, he said, would ensure that operations could immediately resume once security conditions allowed it to do so.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government hoped that ExxonMobil could resume operations sometime this month.

But ExxonMobil officials said any estimate on when the company could operate again would be speculative at present.

Exxon Mobil Indonesia is a unit of U.S.-based energy giant Exxon Mobil Corp.(bkm)