Pipeline leak cuts Exxon's gas supply to Aceh's Arun NGL plant

Pipeline leak cuts Exxon's gas supply to Aceh's Arun NGL plant

Grace Nirang, Bloomberg/Jakarta

Exxon Mobil Corp., the world's largest publicly traded oil company, cut the flow of gas through its pipeline at Arun field in Aceh province because of a leak, Maman Budiman, a vice president at Exxon's Indonesian unit said.

Exxon has reduced supply to PT Arun NGL, Indonesia's oldest liquefied natural gas plant, by as much as 300 million cubic feet a day since Dec. 9, Ari Soemarno, director of trading and marketing of state oil company PT Pertamina said on Sunday. Pertamina is the operator of the plant.

"Exxon is now using a back-up pipeline," he told reporters. "Gas supply has been cut a bit but PT Arun is still working and it won't force us to cancel another LNG cargo."

The U.S. company, which operates the Arun field, supplies gas to PT Arun NGL and local fertilizer makers. Declining output from the field has resulted in lower LNG sales to customers including Korea Gas Corp. and Japan's Tohoku Electric Power Co.

PT Arun has contracts to export 61 LNG cargoes this year after buyers agreed to accept a reduction of 9 cargoes, Ari said. PT Arun is 55 percent owned by Indonesia's state oil company PT Pertamina. Exxon owns 30 percent and Japan Indonesia LNG Co. 15 percent.

Exxon found the leak on Dec. 9 and isolated the damaged segment of pipeline to contain it, Maman said. The pipeline was transporting as much as 600 million cubic feet of gas a day before the incident, he said.

"We're investigating the cause and hope to repair the leak in a few days," Maman said. "There's no indication that it will interrupt cargoes for exports. If there's any, it will be only one cargo."

Pertamina expects repair works to be completed in two or three weeks, Ari said.

Exxon supplied about 1.5 billion standard cubic feet per day of gas to PT Arun from its onshore and offshore fields in 2003, helping PT Arun to export 115 cargoes of LNG to Japan and South Korea.