Arun may cut all LNG export contracts, if re-operation plan fails

PT Arun LNG Plant may cut all of its export contracts if ExxonMobil fails to resume operation by the end of this month as initially expected, according to a senior executive of the state owned oil and gas company Pertamina.

Pertamina's director for downstream division Arifin Nawawi said in Jakarta on Friday that senior officials from the state owned oil and gas company and Arun Plant would meet main buyers in Japan and South Korea within the next two weeks to inform them about the fate of the LNG exports.

"If ExxonMobil is still unable to re-operate this month, then we have to cancel all the contracts, and the buyers are allowed to shift their LNG imports to other countries," he told reporters.

According to him the security situation in Aceh particularly in locations surrounding ExxonMobil operation in Lhokseumawe has significantly improved in recent weeks. But ExxonMobil was still uncertain whether it could resume its gas operation because it had its own standard in judging the security situation, he added.

Arifin said that based on the Pertamina's standard, the situation was conducive enough for ExxonMobil to resume its operation.

ExxonMobil, which supplies natural gas to Arun LNG Plant and several other companies in the province, has stopped its operations since March 9 due to security concerns.

Pertamina has assigned PT Badak Natural Gas Liquefaction in Bontang to meet its export commitment for April and May delivery but the Badak plant was only able to provide 8 of the 11 cargoes requested. To cover the shortage, Pertamina bought three cargoes of LNG from Malaysia's Petronas.

Both Arun and Badak LNG plants are owned by Pertamina.

ExxonMobil, one of two LNG Plants owned by Pertamina, exports 11 cargoes of LNG or about 250 tons a month, mostly two Japan and South Korea.(arry_d)