Fertilizer firm in Aceh to stop operation due to gas supply problem

Aceh-based fertilizer firm PT Pupuk Iskandar Muda I (PIM I) will stop operation if by the end of this month the company doesn't receive nine cargo of gas from ExxonMobil Oil Indonesia (EMOI), the Bisnis Indonesia daily reported on Tuesday.

Amid pressure from various parties, EMOI signed in December an agreement with BP Migas, the oil and gas upstream regulatory body, to supply 12 cargo of gas to PIM I, reports have said.

But PIM I finance director Mashudianto told Bisnis Indonesia newspaper that there was uncertainty whether BP Migas could deliver the promised gas supply.

EMOI, the unit of U.S. energy giant ExxonMobil, is the only natural gas producer in Aceh. But over the past couple of years, it has seen its gas reserves declining, forcing the company to focus gas supply to LNG producer PT Arun NGL Co. to allow it meet export LNG contracts. The move has forced fertilizer firms in Aceh to cut down production due to the lack of gas supply.

Meanwhile, director general of chemical and agro industries at the ministry of industry Benny Wahyudi said that the issue about gas supply in Aceh would be discussed at a cabinet meeting this week. He did not elaborate.(*)