Govt offers two options to rescue AAF fertilizer plant

The government has offered two options to rescue the Asean Aceh Fertilizer (AAF) plant in Aceh from being closed, Koran Tempo reported on Wednesday.

Minister of Industry Andung A. Nitimiharja said in Jakarta on Tuesday that first option would be the rescheduling of liquefied natural gas (LNG) exports from the Arun LNG plant in Lhokseumawe until additional source of gas supply could be obtained.

The second option is to close down a production unit of state owned fertilizer producer PT Pupuk Kaltim in Bontang East Kalimantan so that the Bontang LNG plant can cover Arun LNG's plant obligation and Arun gas field can supply gas to AAF.

"Under the second option, one of Pupuk Kaltim's fertilizer plants would be closed to provide an extra gas supply to the AAF fertilizer plant," the minister said.

If the second option is taken, the Bontang LNG plant in East Kalimantan will be responsible to meet part of the Arun LNG plant's export commitment with the use of the additional gas supply to be obtained from the closure of one of the Pupuk Kaltim's fertilizer plants.

The minister said he would soon discuss the options with the head of BP Migas, the government's agency responsible for gas and oil exploration and production, so that there would be a breakthrough that could be used to prevent AAF, which is owned by several ASEAN member countries, from being closed.

The government under former president Megawati Sukarnoputri had decided to close the operation of the AAF plant due to the lack of gas supply. The existing gas supply from the Arun gas field is only enough to meet the LNG export commitment and to feed the state owned fertilizer plant Pupuk Iskandar Muda's two fertilizer plants in the province.

The government is currently negotiating the development of a new gas field in Aceh with ConocoPhillips to provide additional gas supply to both the LNG and fertilizer plants in the area. (*)