Exxon's claim of $5.9 million to government remains uncertain
Thursday, October 2 2003 - 03:48 AM WIB
"It has not been yet clear how the government would pay Exxon's claim although an agreement on the mechanism of the payment has been made during the recent cabinet meeting," a source was quoted as saying by the paper.
According to him, the government had agreed to pay part of the payment for the sales of gas from Exxon to AAF during a limited cabinet meeting on economy two weeks ago. The meeting was attended by Minister of Energy and Mineral Resources, senior executives of BP Migas, Minister of Trade and Industry and senior executive of AAF.
AAF president director Rauf Purnama said that Exxon agreed to continue to supply its gas to AAF and another Aceh-based fertilizer producer PT Pupuk Iskandar Muda when the 2002 contract ended in December as long as the price of the gas is based on a market price.
After a number of negotiations, the government agreed to meet the demand in order the save the fertilizer plant which is jointly owned by Indonesia and four other ASEAN members. With the agreement, Exxon will sell its price to AAF at US$1.85 per MMBTU. Because AAF is only afford to buy the gas at US$1.5 per MMBTU, the government would pay the difference.
Rauf said that Exxon would not renew the contract for 2004 if its claim to the government is not paid. The company has even halted its supply to AAF because its gas production is only enough to meet its affiliate Arun LNG plant's export commitment.
Exxon has also agreed that part of the export commitment are fulfilled by the North Kalimantan-based Bontang LNG plant to enable it to supply the local fertilizer plants on the condition that the price of the gas sold to AAF and Iskandar Muda is set in parallel with price in the international market. (*)