Pertamina says security at Arun gas fields improving

JAKARTA (JP): Security conditions around the Arun gas fields in Aceh have improved, raising an expectation that American oil giant ExxonMobil Oil Indonesia Inc will soon resume its gas operations, according to state oil and gas company Pertamina on Friday.

Pertamina downstream director Ariffi Nawawi said he had been informed about the "improved security conditions" but he was unsure whether that would create enough confidence for ExxonMobil to resume its operations.

"If ExxonMobil takes the initiative, we will be producing LNG (liquefied natural gas) again by the end of this month," Ariffi told a media meeting.

He added the timing depended largely on whether ExxonMobil felt it was safe enough to return to Aceh.

ExxonMobil suspended its gas operations early in March, following increasing harassment by armed groups, believed to be local rebel forces.

The decision cut off natural gas supplies to the nearby LNG plant, PT Arun NGL Co, disrupting both the latter's LNG production and shipments to South Korea and Japan.

So far, Pertamina has made up for the shortage by using excess LNG supplies from the Bontang LNG plant in East Kalimantan. Beyond May, however, Pertamina will have to buy LNG from other countries to meet its export commitments.

Indonesia risks losing LNG exports worth some US$100 million a month if LNG production at PT Arun remains at a standstill beyond May.

According to Ariffi, ExxonMobil staff are already in the field assessing the situation and preparing for a quick resumption of operations once the company gives the go-ahead.

"They've come up with a detailed plan, and have appointed their people, which isn't easy, to do the job," he said.

Ariffi said the start-up process of ExxonMobil's gas fields would require about two weeks of preparation beforehand.

"Afterwards, the gas will enter the Arun LNG plant, at which point it would take another week to produce LNG," he explained.

Exxonmobil spokesman Bill Cummings admitted that "substantial progress" had been made by the team comprising ExxonMobil and Pertamina in evaluating security conditions and technical matters for the resumption of its operation.

"ExxonMobil and Pertamina have a number of teams that are studying the safest and most efficient way to restart operations in Aceh," he was quoted as saying by Dow Jones.

"We are anxious to resume operations," he said, adding that the company had to be given security assurances for both its staff and facilities before restarting Arun gas production.

The company had said earlier that it was monitoring security conditions through reports from its staff in the field, the military, and from air surveillance.

However, it was uncertain as to just how long a period of peace would be required in order to assure ExxonMobil that it was safe to return.

ExxonMobil frequently reported armed individuals hijacking its trucks, shooting at its supply planes, and even launching mortar attacks at its compounds.

"The security problem is more an issue of confidence, our boldness to start operating under present conditions," Ariffi continued.

He said the government and the military were seeking to convince ExxonMobil to return to Aceh. However, he emphasized that the government had given no deadline for ExxonMobil to resume its gas operations.

Asked how Pertamina's buyers had been reacting to the drawn- out uncertainties of their LNG supplies, he said they had thus far shown a supportive attitude.

"The buyers actually understand our situation 100 percent, there is no problem with them," he said.

He added that Pertamina had been helping Japan and Korea in finding (LNG) supplies from other sources.

Pertamina and Japan, he said, would meet next week to discuss the country's LNG supply for June, when Bontang's excess capacity was expected to run out.

Japan takes around 70 percent of Arun's LNG exports, with the remainder going to South Korea. (bkm)