PIM to get LNG supply from Exxon
PIM to get LNG supply from Exxon
Leony Aurora, The Jakarta Post, Jakarta
Fertilizer producer PT Pupuk Iskandar Muda (PIM) will receive gas
equal to one cargo of liquefied natural gas (LNG) from ExxonMobil
Indonesia if the government can guarantee the provision of a
replacement cargo in the near future.
PIM president director Hidayat Nyakman said on Thursday there
was not yet an official contract securing gas supply for its
fertilizer plants, located in Nanggroe Aceh Darussalam.
"Exxon has an inventory of raw gas equal to one cargo, which
is enough to run one plant for between 50 and 60 days," he said
in a telephone interview.
"Exxon is willing to supply gas starting from July 11,
providing the government -- through BP Migas (the Oil and Gas
Upstream Regulatory Agency) -- guarantees a replacement," he
added.
Head of BP Migas Kardaya Warnika confirmed the plan, saying
that the government would "borrow" gas from Exxon to save PIM
from closing down once it runs out of gas -- a vital substance in
the production of fertilizer -- in three days.
"We will pay for the gas according to market prices," said
Kardaya.
The fertilizer firm's contract with Exxon to supply natural
gas at US$2.3 per million British thermal unit (mmbtu) expired at
the end of last month. So that PIM can afford gas at higher
prices, the government has ruled it can export all of its
products.
However, even with higher global prices, PIM can only pay
$6.55 per mmbtu at the highest, or about $19 million per cargo.
Hidayat said the fertilizer firm would pay $7 million for a
cargo, while the government would cover the rest. When PIM starts
exporting its products, he said, it would reimburse the state.
State oil and gas firm Pertamina, which has been tasked with
finding an LNG cargo in the spot market, has on several occasions
been forced to let go of a cargo as the government did not come
up with the funds in time.
PIM has two plants, each with a production capacity of 1,700
tons per day. Due to its lack of natural gas supply, the company
has been operating one plant at a time.