Pertamina may take over ExxonMobil's gas fields

Pertamina may take over ExxonMobil's gas fields

JAKARTA (JP): State oil and gas company Pertamina indicated on
Thursday that it might take over the operation of the gas fields
in Arun, Aceh, owned by the Indonesian subsidiary of American
energy giant ExxonMobil, if the latter maintained its refusal to
recommence production in the fields.

Pertamina's president Baihaki Hakim said the state company
would deploy its workers to resume the operation of the gas
fields if ExxonMobil Indonesia left them idle until July,
regardless of objections from the world's largest energy firm.

"ExxonMobil should recommence production by July, because at
that time Pertamina has major demands from buyers in (South)
Korea and Japan," Baihaki told reporters after a closed-door
meeting between Pertamina, ExxonMobil and the House of
Representatives' Commission VIII for energy and mineral
resources, environment, science and technology.

He said the government had already suffered US$10 million in
losses since ExxonMobil shut down the fields on March 9.

The losses could soar to $100 million by early next month if
the gas fields remain closed, Baihaki said.

ExxonMobil closed the fields following a surge in violence in
the areas surrounding its fields, stemming from the conflicts
between the Indonesian military and the province's separatist
Free Aceh Movement (GAM).

ExxonMobil's move forced liquefied natural gas producer (LNG)
PT Arun NGL Co., which relies on the former for its natural gas
supplies, to suspend its LNG production and exports to South
Korea and China early this week. PT Arun is owned by Pertamina
(55 percent), ExxonMobil (30 percent) and the plant's LNG
purchasers (15 percent).

The disruptions to LNG shipments have caused jitters on the
regional LNG market, forcing Arun's LNG buyers in South Korea and
Japan to scramble for alternative supplies from the Bontang LNG
plant in East Kalimantan and other LNG producers in Malaysia and
Australia.

The government has pressured ExxonMobil to resume its gas
production, while the military is sending in new troops to boost
security at the company's fields.

But, ExxonMobil, which has sent senior executives from its
headquarters in Texas, the United States, to discuss the matter
with the government, still believes the situation at the fields
is not secure enough for the company to return its workers,
despite an increased military presence.

Meanwhile, AFX-Asia news agency reported that Malaysian-based
Petroliam Nasional Bhd (Petronas) will assist Indonesia in
meeting the latter's LNG supply commitments to Japan and South
Korea following the shutdown of PT Arun's plant.

A Petronas official said the company has already shipped two
LNG consignments to Japan and South Korea and will continue to
supply LNG to the two countries until the Arun plant resumes
operations.

"We do not know when the Arun plant will resume operations but
we are doing this in an effort to help our neighbors," the
Petronas official said.

He declined to disclose the price quoted to Indonesia for the
supply of LNG to Japan and South Korea.

However, he added that this is not a long-term agreement
between Malaysia and Indonesia.

The situation in Aceh has become worse following a recent
decision by the government to repress the province's separatist
movement through a military operation.

On Tuesday, two helicopters transporting the Minister of
Energy and Mineral Resources Purnomo Yusgiantoro, the Bukit
Barisan (North Sumatra) military commander I.G. Purnawa, and a
number of reporters, for an inspection of the situation in Arun,
were fired upon by unidentified gunmen.

GAM has denied responsibility for the shootings.

President Abdurrahman Wahid canceled on Thursday a planned
visit to Aceh because of concerns over the possibility of more
rebel attacks. (tnt/jsk)