Exxon's Indonesian Gas Field Fire to Cut LNG Output (Update2)

Aug. 29 (Bloomberg) -- Exxon Mobil Corp.'s gas field in the north-western Indonesian province of Aceh caught fire two days ago, causing a disruption to supply that will reduce Exxon's liquefied natural gas output to 60 percent, said an official at Indonesia's oil and gas regulator.

``We will be short of one LNG export cargo because repairs will take about two weeks,'' Kardaya Warnika, deputy chairman of Indonesia's oil and gas regulator BPMigas, said in Jakarta last night. ``The fire was put out today, but the plant is running at 60 percent capacity.''

The Aceh fields operated by Exxon supply gas to a plant run by PT Arun NGL, which processes the fuel for export to Korea and Japan. An electrical fault may have caused the fire though sabotage hasn't been ruled out, Indonesia's Energy and Mineral Resources Minister Purnomo Yusgiantoro said last night. Indonesia, the world's top LNG exporter, is investigating the cause, he said.

The Indonesia disruption follows a fire at a rival Malaysian LNG plant last week, which may cause shortages of the fuel for buyers such as Korea Gas Corp. and Tohoku Electric Power Co. The buyers will need to look elsewhere, possibly the Middle East, which may reduce supplies to Europe and the U.S., an analyst said.

``Repair works are still ongoing,'' said Deva Rachman, a spokeswoman at Exxon's Indonesian unit. ``Buyers have been informed about the situation.''

Typically, an LNG cargo is 56,000 metric tons. Last year, the Arun plant produced 6.5 million tons of the fuel, equivalent to 115 cargoes.


Korea Gas has been informed that Petroliam Nasional Bhd., Malaysia's state-owned oil and gas company, may not be able to supply 336,000 metric tons of LNG between September and March because of the fire at its plant in Bintulu on Borneo island, a person involved in the transaction said.

``That's going to be a big problem -- they have to replace them in some way,'' Andrew Flower, an independent LNG consultant based in London, said yesterday. ``The obvious choice for replacement cargoes is the Middle East but most of them may be committed to Korea anyway.''

Indonesia's Purnomo said the fire at Exxon's fields means it won't be able to make up for the loss of Malaysia's LNG.


Aceh on the northern tip of Sumatra island has been under martial law since May 19 after President Megawati Soekarnoputri authorized military force to quell a separatist rebellion following a deadlock in peace talks.

Last week, a grenade exploded outside an office at Exxon's natural gas plant in Indonesia's Aceh province. The blast didn't affect production.

Exxon, the world's largest publicly traded oil company, has been in Aceh since 1968. Arun, the country's second-biggest liquefied natural gas plant, produces about 1.5 billion cubic feet of natural gas a day and 25,000 barrels per day of condensates.

PT Arun is 55 percent owned by Indonesia's state oil company Pertamina, 30 percent owned by Exxon and 15 percent owned by Japan Indonesia LNG Co.

Last Updated: August 29, 2003 00:04 EDT