Two Arun LNG trains to be shut
JAKARTA (JP): State oil and gas company Pertamina and its American partner Mobil Oil Indonesia will soon close two of their six liquefied natural gas (LNG) trains in Arun, Aceh, industrial sources in Singapore said on Friday.
The sources told The Jakarta Post that one train would be closed on Monday, followed by another around March.
Spokesman for Pertamina's Foreign Contractors Management Body (BPPKA) Sidick A Nitikusuma confirmed that two of the six trains would be closed "soon".
Sources said the closure was caused by a decrease in natural gas supplies to the plant.
They said the gas resources in the Arun field had been severely depleted while Pertamina and Mobil had canceled the exploration of new gas in the province due to security problems.
Aceh has been hit by violence for about one and a half years as the Free-Aceh separatist group intensified campaigns for independence following the resignation of former president Soeharto in mid-1998.
Other sources said the closure was related to violence in the province, but Sidick denied this.
"The closure is related to the decision of Japanese buyers to cut LNG imports from the plant, not because of security concerns," Sidick told the Post.
Earlier, Nihon Keizai Shimbun reported that Tohoku Electric Power Co. and Tokyo Electric Power Co. (Tepco) would cut LNG imports from Indonesia by 2.5 million metric tons to a combined one million tons a year, after the current contract expires in December 2004.
The utilities believe large-volume imports under a long-term contract would carry risks amid intensifying competition and slow growth in electricity demand. Production capacity at the Sumatra gas field is also falling.
Tohoku Electric Co. will reduce imports to about 850,000 tons from three million tons, while Tepco will cut imports to some 150,000 tons from 500,000 tons.
The new contract the firms are expected to sign with Pertamina in April will be shortened to between five and 10 years from the current 21, according to the paper.
Pertamina data says the six trains of Arun LNG plant currently produce a combined 12.3 million tons of LNG per year. The closure of the two trains will cut the plant's output by about four tons.
Aside from Japanese buyers, the Arun LNG plant also supplies LNG to Taiwan and South Korea.
The LNG plant was built several years after Mobil found a gas reserve of 14 trillion cubic feet and a condensate reserve of 950 million barrels in the Arun field, which is also called the B Block, in 1971.
Indonesia is the world's largest LNG exporter.
Aside from Arun, Indonesia has another LNG center in Badak, Bontang, East Kalimantan, which currently has eight LNG trains with a total output of 21.4 tons per year. (jsk)