AAF halts operation after ExxonMobil cuts off gas supply

PT Aceh Asean Fertilizer finally closed its fertilizer plants in Lhokseumawe, Aceh on Monday evening, after ExxonMobil cut off its gas supply to the fertilizer producer which is jointly owned by Indonesian government and other members of the Association of Southeast Asian Nations (ASEAN).

AAF?s Corporate Secretary, Amrul AS, said in Lhokseumawe that ExxonMobil halted its gas supply on 5:20 pm on Monday, just 20 minutes after the deadline set by the American company passed.

?AAF automatically closed the operation of its fertilizer plants after the halt in the gas supply. The electricity supply from the company to several villages had also been cut off,? he said.

The halt in the gas supply has angered the local villagers. They accused ExxonMobil of causing further suffering the local people in the troubled province. AAF employs around 700 employees and 500 contract workers. The company also provided electricity supply to eight villages near the company?s industrial complex as part of its community development program.

Amrul feared that there would a wave of demonstrations within the next few days to protest the halt in the gas supply.

Meanwhile the head of the military command in the province, Mayor General Endang Suwarya said he would bring the issue related to AAF?s operational problem to the political and security meeting in Jakarta this week.

He said that the government should take all the risks to enable the fertilizer producer to resume operation. The general described the American company?s move to cut off the gas supply as being contra-productive.

Exxon agreed to resume the gas supply on November 18 after the government promised to give a subsidy on the purchase of gas by AAF. But no contract has been made because the government?s subsidy is still not clear.

Exxon stopped its gas supply in August this year after its sales contract with AAF ended. The company will resume the gas supply only if the price of gas is based on market price. AAF has said that it has no money to buy the gas at the market price and could make the purchase only if there is a subsidy from the government.

Under the latest agreement, Exxon would only provide a gas supply until December 22 if the government could not meet the gas company?s demand to buy the gas at market price. (*)