LNG June supply to South Korea and Japan safe, says Pertamina

JAKARTA (JP): Pertamina's president Baihaki Hakim said here on Thursday that the state-owned oil and gas company would be able to fulfill its liquefied natural gas (LNG) export commitment for June to Japan and South Korea, although the Arun LNG plant in Aceh was still unable to resume operations.

Baihaki said that the East Kalimantan-based Bontang LNG plant's production would be still sufficient because the June demand from the two countries had been lower than the initial estimate.

"After some observations and talks with them (the buyers), June has turned out not to be a critical month," Baihaki told reporters, after attending the opening ceremony of Jakarta's representative office of the Malaysian Petroliam Nasional Berhad (Petronas).

The ceremony was also attended by Malaysia's Prime Minister Mahathir Mohamad.

Pertamina had earlier estimated that by June, LNG supply from Bontang would not be able to meet buyers' growing demands.

"That (estimate) was based on observations two months ago," he explained.

The Bontang plant was assigned to use its excess production to fulfill the export commitment of the Arun plant, after the latter was forced to halt its production, due to the closure of the Arun gas fields.

American oil and gas giant PT ExxonMobil Oil Indonesia Inc., suspended the operation of its gas fields in Arun in early March due to security concerns.

Under its contract with LNG buyers, Pertamina had to supply around 10 shipments each month from the Arun plant.

But Baihaki said that the demand for Arun's LNG from Japanese and Korean buyers had dropped to six to seven shipments, or equal to Bontang's current excess LNG capacity.

But he warned that after July, Bontang's capacity would not be able to cope with a potential rise in demand. "After that (July) it looks as if there's going to be a problem," he said.

Since March, Pertamina approached several LNG producers to secure deals for additional LNG supply for its buyers.

Baihaki said he would meet with Petronas to discuss its readiness to fill in for Bontang, should LNG demand later outstrip the plant's excess capacity.

Pertamina, he said, had already postponed Bontang's maintenance schedule slated for June.

Petronas' LNG plants are also scheduled for maintenance soon, so Pertamina wants to ensure that their schedule doesn't coincide with Bontang's, he added.

Baihaki further said that several companies in Aceh have offered their workers as temporary replacements for ExxonMobil's.

"Aceh local companies have proposed that if their Acehnese workers could take on maintenance work at Exxon's sites, it might be possible that the security problem could be overcome," he said.

He was quick to add though that the offer was speculative. "There are many parties involved in the conflict in Aceh," he said.

Nonetheless, Baihaki said he wouldn't reject the idea just yet. He considered it to be a new alternative to the previous assumption that Arun's operations depended solely on ExxonMobil's workers.

Meanwhile, Petronas president Tan Sri Dato' Mohd Hassan Marican said the opening of his company's office in Jakarta was long overdue.

"It is unfortunate that it has taken us so long to establish our presence in Indonesia, considering the proximity and the strong traditional ties," he said in his opening speech.

Marican said Petronas' relationship with Pertamina began when the former sought advice in the formulation of production-sharing contracts.

Petronas was founded in 1974 and has since become a world oil and gas company, with a presence in 24 countries, and an oil output of about 200,000 barrels of oil per day (bpd), as against Pertamina's own 80,000 bpd. (bkm)