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)