EMOI says gas supply to fertilizer firms in first quarter 2004 not possible

PT Exxon Mobil Oil Indonesia (EMOI)said that the company would not be able to supply gas to fertilizer firms in Aceh during the first quarter of 2004 due to a reduction in LNG (liquefied natural gas) invetory levels at its PT Arun gas plant.

"Recently, PT Arun has experienced operating problems that have resulted in a reduction in LNG inventory levels.

Continued gas supply to the fertilizer plants, at least through 1Q04 (first quarter 2004), will not be possible in order to allow PT Arun to build inventory to meet its LNG contracted quantity requirements," EMOI spokesperson Deva Rachman said in a statement to Petromindo.com on Thursday.

EMOI is the only natural gas supplier for two fertilizer firms in Aceh: PT Asean Aceh Fertilizer (AAF) and PT Pupuk Iskandar Muda (PIM). But as the supply contracts to these fertilizer firms had expired since the later part of 2003, EMOI is now concentrating its natural gas reserve for LNG production to meet government export committment amid declining gas reserves.

Earlier on Wednesday, PIM urged the government to reduce the LNG export committment from the Arun plant, to ensure natural gas supply for the fertilizer firm.

Both PIM and AAF have complained that they have suffered huge financial losses due to months of gas supply disruption from the Arun field.

Arun reservoirs have been in production for almost 30 years.

"As a non-renewable resource, there are finite amounts of gas in any reservoir and there is a natural decline in available supply that can be calculated over time and must be managed. There are also technical limits on the amounts of gas that can be extracted and processed for use at any given time," Deva said.

"The current reality is that the Arun area fields simply cannot produce enough gas on a reliable and sustainable basis to meet both the Government's existing long-term LNG contracts and the demands of all the national projects in Aceh."(*)