Govt provides LNG subsidy for Aceh fertilizer plants
Thursday, February 12 2004 - 03:03 AM WIB
The decision, made at a cabinet meeting on Wednesday, would cost the government some US$9.4 million in subsidy to cover the price gap, Tempo Interaktif reported on Thursday. The government has to purchase the overseas LNG at international price (and swap it with Arun's production), while Arun sells the equal volume of LNG to local fertilizer firms at a cheaper price.
Fertilizer firms PT Pupuk Iskandar Muda (PIM) and PT Asean Aceh Fertilizer (AAF) had sourced their gas needs from Arun. But the latter has recently stopped the supply due to declining gas reserves.
ExxonMobil has said that the existing gas production is only enough to meet the company's LNG export contracts with foreign buyers.
For months PIM and AAF have been lobbying the central government to resolve the problem.
State Minister for Research and Technology Hatta Rajasa said that the cargo of LNG to be purchased overseas is equivalent to 75 million cubic feet per day of natural gas produced from the Arun field.
Hatta said that the LNG would only be enough to meet the gas need of PIM and AAF for the month of April but the government promised to provide similar facility for the coming months.
About 55 MMCFD of the LNG would be supplied to PIM's second plant and the remaining would be given to PIM's first plant and to AAF, he said. "The LNG supply for PM's first plant and AAF would be used only for warming purposes. It will not be used for production," he said.(*)