Pertamina postpones Arun start-up to mid-July

Pertamina postpones Arun start-up to mid-July

JAKARTA (JP): State-owned oil and gas company Pertamina said
on Friday that gas production from the Arun gas fields in Aceh
was expected to be restarted by mid-July, or two weeks later than
previously scheduled.

Pertamina president Baihaki Hakim said the new schedule was
based on talks with the U.S. based oil and gas giant PT
ExxonMobil Oil Indonesia Inc., which operates the fields.

He gave no reason why Pertamina and ExxonMobil agreed to the
new schedule. Previously, Pertamina had said it expected
ExxonMobil to have resumed its Arun operation by late June or
early July.

"We'll start operations by July 14 or 15. At present 200
employees of ExxonMobil are already there," said Baihaki at a
media briefing.

It was the first time that ExxonMobil was willing to set a
date for the resumption of its Arun operation.

Prior to this, ExxonMobil had been unwilling to commit itself
to stating a date for the restarting of operations.

Last Monday, an ExxonMobil official said that a fixed schedule
was being worked out based on inputs from its technical team.

The official said the company had deployed a technical team to
Arun to asses any damage that had occurred during its absence.

In mid-March, ExxonMobil evacuated its staff from Arun due to
security threats believed to have come from local separatists.

The company has since resisted government pressure to return,
citing improved security as a precondition.

ExxonMobil's pullout from Arun has cut off the natural gas
supply to the nearby Arun liquefied natural gas (LNG) plant,
which exports LNG to Japan and South Korea.

So far, Pertamina has been able to cover the shortfall using
excess LNG supply from the Badak LNG plant in Bontang, East
Kalimantan.

But by late July, supplies will have reached the critical
stage as an expected increase in LNG demand threatens to outstrip
Badak's capacity.

Pertamina had earlier said it would take about one month after
the gas started flowing from Arun for the Arun LNG plant to start
shipping out LNG.

Given this estimate, Pertamina has said it had little choice
but to force Arun gas operations to start by early July or else
risk not being able to meet Japanese and Korean LNG demand.

Should this happen, the two countries would be entitled to
repudiate their contracts with Pertamina, Baihaki has said.

Baihaki did not say whether under the new schedule Pertamina
would still be able to catch up with the increase in LNG demand.

He said he hoped to see the Arun LNG plant operating at half
capacity, or with two out of its four LNG trains operating, once
gas production began in Arun.

At full capacity, the LNG plant can ship out 10 LNG cargoes a
month worth US$100 million.(bkm/dja)