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Monday, 12 March, 2001, 13:16 GMT
ExxonMobil closes Indonesian fields
Aceh rebels on exercises
Aceh rebels have threatened ExxonMobil employees
Indonesia is struggling to maintain its gas exports following a decision by the international petrochemical company ExxonMobil to halt production at three of its fields.

ExxonMobil has closed down oil and gas fields in North Aceh, northern Sumatra, because of security concerns.


We will remain committed to fulfil supplies to Japan and (South) Korea

Purnomo Yusgiantoro
mines and energy minister
The fields provide the raw material for the production of liquefied natural gas (LNG), which is mainly used for domestic purposes, including butane and cooking gas.

Indonesia, which exports LNG to South Korea and Japan, is seeking to secure additional supply from other producers, such as Australia or Malaysia.

The country relies heavily on its oil and gas exports, causing concern that the current shortage could have wide-ranging impact on its economy.

'Committed'

The government, however, is adamant that Indonesia will fulfil its contractual obligations.

"We will remain committed to fulfil supplies to Japan and (South) Korea," said Indonesia's mines and energy minister, Purnomo Yusgiantoro.

Student riots in Jakarta
Students are calling for President Wahid's resignation
"I will also seek Malaysia's help to make up for any shortage in our LNG supplies to Japan and Korea."

The problem comes at a crucial time for Indonesia, where political uncertainty has eroded confidence in the country.

Indonesia's President Abdurrahman Wahid faces calls for his resignation as the country's stock markets plummet.

Jakarta's stock index closed down 4.22% on Monday, while Mr Wahid defied a demonstration by thousands of students outside the presidential palace.

"The Exxon news illustrates one of the problems of doing business in Indonesia," said one dealer at a local brokerage.

Violence

Violence is common in North Aceh, where guerrillas from the Free Aceh Movement have been fighting for a separate Islamic state since the mid-1970s.

Indonesian troops in Aceh
The government plans to send in more troops to increase security
Despite recent ceasefires, fighting between the guerrillas and government troops has continued.

ExxonMobil sites have been the scenes of fighting and staff have been threatened and even kidnapped on one occasion.

Also, vehicles have been burned and shots have been fired at ExxonMobil's chartered airplanes.

Boosting security

The company supplies the raw material to Indonesian state oil and gas company Pertamina, which produces and exports LNG.

A spokeswoman for ExxonMobil Indonesia, Julia Tumengkol, said the company was working closely with Pertamina.

She added that production would be resumed whenever "the time allows us to do so."

Mr Yusgiantoro said that the military had been sent in to protect the fields, adding that more battalions would be called up.

"So we hope that in a few days, there should be security at the production centres," he added.

But Tengku Sofyan Daud, deputy of the rebel Free Aceh Movement, said: "We can't give any security guarantee over the operations of the plants as long as the security forces are here."

See also:

12 Mar 01 | Asia-Pacific
Wahid stands firm amid protests
23 Feb 01 | Business
Indonesia at the crossroads
27 Feb 01 | Media reports
Indonesia press anger over Borneo
13 Sep 00 | Asia-Pacific
Analysis: Indonesia's fragile archipelago
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