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)