Vital firms in Aceh resume operations

Vital firms in Aceh resume operations

Moch. N. Kurniawan, The Jakarta Post, Lhoksemauwe, Aceh

Three of the five key firms in Aceh province have resumed
operations amid signs of an improving security situation.

Fertilizer producer PT ASEAN Aceh Fertilizer (AAF) became the
third firm to restart operations on Sunday, following the lead of
liquefied natural gas (LNG) plant operator PT Arun NGL Co. and
another fertilizer producer, PT Pupuk Iskandar Muda (PIM).

"I'm sure the current situation (in Aceh) will become more and
more favorable for businesses," Minister of Trade and Industry
Rini Soewandhi said on Sunday in a ceremony to mark the restart
of the AAF plant in Lhoksemauwe, North Aceh regency.

"And it's the government's priority to see that vital firms
here resume operations."

She expected the two other key firms, pulp company PT Kertas
Kraft Aceh (KKA) and PT Humpuss Aromatic, would soon start
operating again.

The ceremony was also attended by Minister of Energy and
Mineral Resources Purnomo Yusgiantoro, Aceh governor Abdullah
Puteh, and top executives of state owned oil and gas company
Pertamina, AAF, PIM and Exxon Mobil Indonesia Inc.

AAF resumed production last week after closing its operation
for nine months due to a halt in the supply of gas from the Arun
fields.

Exxon Mobil Indonesia shut the gas fields down between March
and mid-July due to security threats in the restive province as
local rebels intensified their decade-old fight to win the oil-
rich province's independence from Indonesia.

Exxon Mobil delivers some 90 percent of its gas to LNG
producer Arun NGL, while the remaining 10 percent goes to AAF,
PIM, KKA and Humpuss Aromatic.

Limited attacks are still occurring in the gas fields,
deterring Exxon Mobil from producing gas at the normal rate of
1.6 billion cubic feet per day.

AAF President Rauf Purnama and PIM president Hidayat Nyakman
both agreed that the situation in Aceh was improving.

The two said both companies planned to produce urea-based
fertilizer at their full capacities of 660,000 tons and 570,000
tons respectively later this year.

"But we must wait for the gas from the Arun fields to reach
the normal supply of 63 million cubic feet per day (mmcfd) from
the current 55 mmcfd," Rauf said.

At present, AAF is producing urea at 85 percent of its full
capacity, or 561,000 tons, while PIM produces about 456,000 tons.

PIM's output reached 220,000 tons last year, or just 48
percent of its target, because of a seven-month production halt.

PIM resumed production in late August.

Hidayat said PIM had also received a US$79.9 million loan
commitment from three local banks, BNI, Bank Mandiri and BRI, to
continue the development of a second plant following improvements
in the security situation.

He said the development of the PIM II plant would be completed
in August next year, with a production capacity of 570,000 tons.

Work on the facility, which started in 1999, has been halted
three times since 2000 due to security concerns.

Separately, Arun NGL vice president Hasan Saad said the
company had only managed to deliver 51 LNG shipments to South
Korea and Japan last year, down from its initial target of 116,
or about 23.5 million metric tons, because of the Arun production
halt.

Hasan said the company expected to be able to make 108 export
shipments this year.

Arun NGL resumed operations in July.