Indonesia sends troops to protect Arun gas fields

Indonesia has stationed 2,000 troops around Arun to protect the gas fields and the Arun liquefied natural gas plant because recent violence is threatening to disrupt gas exports vital to Indonesia's struggling economy. ExxonMobil Indonesia, a subsidiary of ExxonMobil Corp., Irving, Tex., suspended operations in the area last week and evacuated its staff.

Mar 19th, 2001


By an OGJ Online Correspondent


SINGAPORE, Mar. 19
�Indonesia has stationed 2,000 troops in Arun to protect the gas fields and the Arun liquefied natural gas plant because local violence is threatening to disrupt gas exports vital to Indonesia's struggling economy.

ExxonMobil Indonesia, a subsidiary of ExxonMobil Corp., Irving, Tex., suspended operations in the area last week and evacuated its staff because of threats from Free Aceh rebels, who have been fighting for independence.

One of the country's largest LNG producers, ExxonMobil Indonesia produces 1.6 bcfd. Closure of the fields and LNG plant at Arun has prompted major South Korea to search for alternative suppliers.

Indonesia Chief Politics and Security Minister Susilo Bambang Yudhoyono said the government wanted production in Arun restored as soon as possible.

"This is the biggest security deployment in Indonesia ever to defend a vital installation," he said of the positioning of three battalions of security forces.

ExxonMobil Indonesia had said earlier it was unclear when it would reopen the three gas fields.

Yudhoyono said security of the LNG supply has not been disturbed because Bontang LNG centers can cover for the supplies disrupted at Arun (OGJ Online, Jul. 17, 2000).

Industry sources had said the Bontang LNG plant in East Kalimantan was near capacity. Officials at the state-owned Pertamina insisted Bontang has enough spare capacity to cover the Arun shortfall for a limited period.

Pertamina was looking to Malaysia and Australia to help meet contracted sales if necessary because of the Arun stoppage. Already deeply in debt, Indonesia relies heavily upon its oil and gas exports for revenue.

Tohoku Electric Power Co. Inc. of Japan earlier said it will buy LNG from Malaysia instead of Indonesia because of the violence in Aceh.

Japan's only other importer of Indonesian LNG, Tokyo Electric Power Co. Inc. (Tepco), said it was not immediately affected by events in the troubled province. A Tepco spokesman said that if the Arun problem continues until July, then Tepco would consider finding alternative supplies.

In a separate development, Indonesia�s cabinet has decided not to raise price limits for kerosine, diesel, and premium gasoline although it will raise bunker fuel and fuel for industrial users 50-100% on Apr. 1. Fuel price increases have prompted riots in Indonesia in the past.

Indonesia had planned to increase fuel prices by an average of 20% in April in a bid to cut state subsidies by 4.7 trillion rupiah ($478.23 million US) to 40 trillion rupiah in the 2001 budget.

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