Exxon denies it has agreed to supply gas to AAF

ExxonMobil Oil Indonesia has reportedly denied media reports that the company had reached an agreement with the government to resume its gas supply to PT Asean Aceh Fertilzier (AAF), Bisnis Indonesia reported on Monday.

AAF’s Financial Director, Daud Sendatha, said that ExxonMobil’s denial was made when he confirmed the report about the agreement with the company’s management. “They said that they had never been contacted by the government about the plan to resume gas supply,” Daud said.

Earlier, Coordinating Minister of the Economy's deputy Dipo Alam and deputy chairman of BP Migas Kardaya Warnika said that ExxonMobil had agreed to supply gas to PT Pupuk Iskandar Muda I and AAF for November and December. They said ExxonMobil agreed to sell the gas at US$1.85 per MMBTU. The company also agreed to reduce its LNG exports to Korea to enable it to resume the gas supply.

ExxonMobil stopped its gas supply to the two fertilizer companies due to the decline in its gas reserves. The existing gas production is all supplied to the Arun LNG plant to enable the latter to meet its export commitment.

The company had said that it could resume the gas supply to the fertilizer companies if the government allowed it to switch part of the export orders to the Bontang LNG plant in East Kalimantan.

ExxonMobil also demanded the price of its gas sold to the companies to be based on international prices so that the switch of its gas production to the two fertilizer producers would not cause a financial loss to the company. (*)