PT Arun NGL Co. may have to reduce output by 2004

PT Arun NGL Co. may have to reduce output by 2004

JAKARTA (JP): State oil and gas company Pertamina said on
Thursday that its liquefied natural gas (LNG) subsidiary PT Arun
NGL Co, based in Aceh, may have to reduce its output in five
years due to a decrease in demand.

The head of Pertamina's foreign contractors management body,
Gatot K. Wiroyudo, said Arun's sales contracts with some Japanese
buyers would expire in 2004.

So far, the Japanese buyers have not confirmed that they will
extend their contracts.

"If they don't want to extend the contracts we shall look for
alternative buyers.

"If there are no buyers, Arun has to reduce its output. But,
if we can find new buyers, the LNG plant may have to increase
output," Gatot said.

Arun, named after the gas field in North Aceh discovered and
being developed by American energy company Mobil Corp, currently
produces 8.5 million tons of LNG per year.

Under the 20-year contract expiring in 2004, Arun has to
supply Tohoku and Tokyo EPC with 3.51 million tons of LNG per
year.

In the past, Pertamina has always successfully extended sales
contracts with its LNG buyers, including those in Japan, South
Korea and Taiwan.

In 1995, Pertamina signed agreements with its Japanese and
Korean buyers to extend three LNG sales contracts, worth US$23.7
billion, to between year 2010 and 2018. The contract extension
agreements were signed between three years and eight years ahead
of the expiration of the contracts.

Pertamina data say Arun is 55 percent owned by Pertamina, 30
percent by Mobil and 15 percent by its Japanese buyers grouped in
the Japan Indonesia LNG Co.

Aside from Arun, Indonesia has another LNG center in Badak,
Bontang, East Kalimantan, with seven trains producing 18.5
million tons of LNG per year.

The Wiriagar area in Irian Jaya is projected to be the
country's third LNG center following the recent discovery of a
huge gas reserve in the area by American energy company Atlantic
Richfield Company (Arco).

But, Pertamina and Arco have not begun developing the so-
called Tangguh project as they have yet to find buyers for the
LNG to be produced at the planned plant.

Indonesia is the world's largest LNG exporter, with export
volume reaching some 10 million tons per annum. (jsk)