[Kabar-indonesia] 14 oil/gas/mining reports: Pertamina to Raise Industrial LPG Prices [+Cepu]

[JoyoNews at aol.com]

14 oil/gas/mining reports:

- Indonesia's Pertamina to raise LPG prices
  for industrial users by 30.7 pct
- Indonesia 2007 subsidized fuel consumption
  seen 5 pct above quota - Pertamina
- Indonesia Pertamina, Norway Statoil To
  Ink Joint Ops Deal
- Upstream: Cepu gets moving in Indonesia
- Bloomberg: Oil, Heating Oil Tumble to 
  5-Month Lows on Ample U.S. Supplies 
- Upstream: EMP lines up sale of subsidiary
- ST: Vietnam aims to build nuclear power 
  plant within 10 years [Its ambitions have 
  met with no opposition as many believe 
  Hanoi will comply with UN policy]
- Upstream: Yards on blocks for Belut work
- Indonesia says aims to raise coal output
  next year
- Indonesia's Arutmin, Kobe Steel develop 
  68 mln usd 'upgraded brown coal' plant
- Foreign ships still allowed to transport 
  coal, oil in Indonesia
- Indonesian govt offers incentives to build
  copper smelter
- Platts: Indonesia's GT Petro to shut down
  MEG line on high ethylene costs
- Pertamina Headlines, Thursday, September 7 
  and Friday, September 8, 2006

Indonesia's Pertamina to raise LPG 
prices for industrial users by 30.7 pct

JAKARTA, September 8 (XFN-ASIA) - PT Pertamina said it will raise the
price of liquefied petroleum gas (LPG) for industrial users by 30.7
pct to 5,071 rupiah per kilo at its filling plant and 5,280 at filling
stations, with effect from Monday (Sept 11).

In a statement, Pertamina said the increases may cut its losses from
its LPG business by 189 bln rupiah from the 2.66 trln rupiah estimated
for this year.

The price for household consumption is kept at 4,250 rupiah per kilo, it said.

LPG sales to industrial users account for 15-30 pct of Pertamina's
total LPG sales of nearly 1 mln tons a year.

LPG is a loss-making business because Pertamina does not receive
government subsidies for selling the product below its commercial
price, as in the case of oil fuel products.

Pertamina last raised LPG prices for industry in Dec 2004.

-------------------------------------------------------

Indonesia 2007 subsidized fuel consumption 
seen 5 pct above quota - Pertamina

JAKARTA, September 8 (XFN-ASIA) - State-run oil and gas firm PT
Pertamina said nationwide consumption of subsidized fuel products is
likely to be about 5 pct above the government's quota of 37.9 mln
kiloliters.

"If the economy grows faster (than projected by the government), it
(fuel consumption) will be about 5 pct higher," Pertamina marketing
and commerce director Achmad Faisal told reporters.

The government is forecasting GDP to grow 6.3 pct next year, up from
5.9 pct seen for this year.

The quota is the maximum amount of fuel products that Pertamina can
sell below commercial prices and for which it receives a governement
subsidy.

The government has projected that its fuel subsidy next year will
reach 68.6 trln rupiah, up from 62.7 trln seen for this year.

The higher subsidy for next year assumes a higher average oil price of
65 usd per barrel against 62 usd this year.

---------------------------------------------------------

Indonesia Pertamina, Norway Statoil To Ink Joint Ops Deal

JAKARTA, September 8 (Dow Jones)--Indonesia's state-owned oil firm
Pertamina (PTM.YY) and Norway's state-owned Statoil ASA (STL.OS) will
sign a joint cooperation agreement in Oslo on Wednesday, a document
obtained by Dow Jones Newswires indicates.

The memorandum of understanding, the first between the two firms, will
be signed in Oslo by Pertamina chairman Ari Soemarno and Statoil chief
executive Helge Lund during a state visit by Indonesia's President
Susilo Bambang Yudhoyono, the document stated.

"The MOU provides the terms and conditions for analyzing and pursuing
joint business opportunities in the area of exploration and
production, both first in Indonesia, Norway and then in other
countries," the document said.

"The cooperation between Pertamina and Statoil will be based on the
latest technology from both sides."

The document didn't further elaborate on potential joint cooperation
between the two companies nor did it provide any hint of possible
investment by either side. [ 08-09-06 0816GMT ]

The pending MOU reflects Indonesia's efforts to increase foreign
investment in its oil and gas sector in order to reverse faltering
output.

Investors have fled the sector in recent years due to perceptions of
rampant corruption, judicial unpredictability and shambolic
infrastructure.

That lack of investment has made Indonesia, the sole Southeast Asian
member of the Organization of Petroleum Exporting Countries, a net oil
importer in recent years.

The deal will also boost Statoil's foothold in Asia.

The Norwegian firm is storing about 11.3 million barrels of crude oil
in South Korea under a joint stockpiling deal with the South Korean
government, according to Korean National Oil Corp., which overseas
crude oil reserves jointly held by Seoul and foreign oil companies.

Statoil has also advised East Timor on how to manage its oil and gas reserves.

-----------------------------------------------------------

Upstream
September 8, 2006

Cepu gets moving in Indonesia

ExxonMobil is making steady progress on the $2 billion-plus Banyu Urip
oilfield development on the Cepu block in Indonesia, writes Russell
Searancke.

A huge floating storage and offloading vessel with 2 million barrels
of oil storage capacity and a tower mooring system is one of three
packages the US oil giant will require for Cepu.

The other two packages are for the onshore field development work, and
the subsea pipeline system that will transport Cepu oil to the FSO.

Sources said ExxonMobil is expected to begin pre-qualification
exercises in the fourth quarter of 2006 for the three packages.

There remains a question mark over the difficult task of sourcing a
very large crude carrier for conversion into the FSO.

Sources said ExxonMobil may buy a tanker that it would provide to the
winning floater contractor rather than opting for a newbuild vessel.

The Cepu block operator intends to own the FSO, which is set to be the
world's largest shallow-water vessel of its type.

Global giants of the floating production world SBM Offshore and Modec
have listed the Cepu FSO as major targets in 2006 and 2007.

The two companies and Bluewater were involved in the aborted Cepu FSO
tender process back in 2001.

All the main regional suppliers of mooring systems including
Bluewater, SBM, APL, Prosafe and Sofec will be expected to chase the
Cepu external turret.

On 15 March, ExxonMobil signed a joint operating agreement with
Pertamina for the Cepu contract area in East and Central Java.

At the time, ExxonMobil chief executive Rex Tillerson said: "We look
forward to working with Pertamina and the government of Indonesia to
bring this important new resource on production."

Partners in Cepu are operator ExxonMobil, Pertamina, (45% each), with
the remaining 10% shared by companies appointed by the provincial and
local administrations.

--------------------------------

Oil, Heating Oil Tumble to 5-Month Lows on Ample U.S. Supplies 

By Mark Shenk

Sept. 8 (Bloomberg) -- Crude oil and heating oil tumbled to five-month lows, 
and gasoline fell, on signs that U.S. fuel inventories will be sufficient as 
economic growth in the world's biggest energy consumer slows. 

``The geopolitical picture is quieter than it has been and there is no 
fundamental reason for prices to rise,'' said Michael Fitzpatrick, vice president 
for energy risk management at Fimat USA in New York. ``There is ample crude oil 
around, refineries are operating at high levels and the economy is slowing, 
which will depress demand.'' 

Crude oil, heating oil, diesel and gasoline supplies last week were above the 
five-year average, according to the Energy Department. The faltering U.S. 
housing market will be a drag on economic growth, an analyst survey showed. 
Concern that sanctions would be imposed on Iran after an Aug. 31 deadline to stop 
uranium enrichment helped to bolster prices last month. 

Crude oil for October delivery plunged $1.07, or 1.6 percent, to $66.25 a 
barrel on the New York Mercantile Exchange, the lowest close since April 4. 
Prices fell 4.2 percent this week. 

Heating oil for October delivery slipped 4.44 cents, or 2.4 percent, to 
$1.8432 a gallon, the lowest close since March 28. 

Crude-oil supplies fell 2.21 million barrels to 330.6 million in the week 
ended Sept. 1, leaving inventories 12 percent higher than the five-year average, 
the Energy Department said yesterday. Refineries operated at 93.6 percent of 
capacity, the highest since June. 

Fuel Stockpiles 

Supplies of distillate fuel, a category that includes heating oil and diesel, 
rose 3.1 million barrels to 139.9 million barrels last week. The gain left 
stockpiles 7.7 percent higher than the five-year average. 

``The distillate numbers are certainly reassuring to folks,'' said Rick 
Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. 
``We are going into the heating season with rising stocks.'' 

Gasoline inventories rose 718,000 barrels to 206.9 million, leaving supplies 
4.2 percent higher than the five-year average. 

Gasoline for October delivery declined 3.19 cents, or 1.9 percent, to $1.6098 
a gallon, the lowest close since Feb. 28. Pump prices have followed futures 
lower. Regular gasoline, averaged nationwide, is down 11 percent from a year 
ago, the AAA, the nation's largest motorist organization, said. Gasoline fell 
1.7 cent yesterday to an average $2.683 a gallon. 

Commodity Prices Fall 

Metal markets joined energy in declining today amid signs of slowing demand. 
Gold touched a two-month low, palladium plunged 6 percent, its biggest loss 
since June, and copper prices fell the most in three weeks. 

The declines sent the Goldman Sachs Commodity Index to its second straight 
weekly decline. The Reuters-Jefferies CRB index of 19 commodities fell 1 percent 
to 320.39, the lowest since March 22. 

Oil has fallen 15 percent since reaching a record $78.40 on July 14 on 
concern that fighting in Lebanon could spread to other countries in the Middle East, 
source of almost a third of the world's oil. Israel is prepared to lift its 
blockade of Lebanese ports today, about 24 hours after it ended a ban on 
flights, as naval forces moved in to prevent unauthorized arms shipments. 

``The Aug. 31 deadline came and went with no action taken,'' Mueller said. 
``Some of the risk that had been added to the price is now being removed.'' 

European Union foreign policy chief Javier Solana said there will be no 
United Nations sanctions against Iran as long as talks over the country's nuclear 
program continue, Agence France-Presse reported. 

Meeting on Iran 

Diplomats from the UN Security Council and Germany met in Berlin yesterday to 
decide whether to punish Iran for refusing to stop uranium enrichment by the 
Aug. 31 deadline. They will discuss the matter again on Sept. 11, U.S. 
Undersecretary of State Nicholas Burns said today in Berlin. The U.S. wants a draft 
resolution as early as next week, Burns said. 

Iran has the second-biggest proved oil reserves and almost a quarter of the 
world's oil flows through the Strait of Hormuz, a narrow waterway between Iran 
and Oman at the mouth of the Persian Gulf. 

``The upside risks in the short-term are hurricanes and Iran,'' said Craig 
Pennington, global leader of energy research at Schroders Plc in London. ``When 
it comes to Iran, it looks like there will be a lot of talk about sanctions 
but no action.'' 

Tropical Storm Florence, the sixth named storm of the Atlantic hurricane 
season, is heading toward Bermuda and is not expected to veer toward Gulf of 
Mexico oil fields, according to the National Hurricane Center. By this time last 
year 15 named storms had developed in the Atlantic, seven of them hurricanes. 

Prices may fall on speculation that U.S. fuel inventories are sufficient to 
meet demand in coming months, according to a Bloomberg News survey. Nineteen of 
40 analysts and traders surveyed, or 48 percent, said prices will decline 
next week. Ten projected an increase and 11 said futures would be little changed. 

OPEC Meeting 

The Organization of Petroleum Exporting Countries should leave production 
unchanged when it meets Sept. 11 in Vienna, said Shokri Ghanem, chairman of 
Libya's National Oil Corp. It's too soon to think about cuts, Ghanem said in an 
interview. OPEC spare capacity is insufficient to lower prices, he said. 

Brent crude oil for October settlement slipped $1.20, or 1.8 percent, to 
$65.33 a barrel on the London-based ICE Futures exchange, the lowest close since 
March 28. 

----------------------------------------

Upstream
September 8, 2006

EMP lines up sale of subsidiary

Indonesian private oil company Energi Mega Persada (EMP) is planning
to sell off subsidiary Lapindo Brantas, operator of the block where
continuing mud flows have now killed one person, to subsidiaries
wholly-owned by the influential Bakrie Group, writes Amanda Battersby.

The catastrophe claimed its first fatality last week when one of two
men hurt when the mud exploded, shooting tens of metres into the air
at the site in Sidoarjo Regency, Indonesia, succumbed to his injuries.

The area has now been declared off-limits to the public.

EMP's divestment, which is expected to be effected in the near future,
is subject to independent valuation and shareholder approval.

The company, through Hong Kong-based Kalila and Pan Asia Enterprise,
owns 99.99% of Lapindo Brantas, which has a 50% operated stake in the
Brantas block.

The Indonesian police have named nine suspects in relation to the 29
May well control incident at the Banjar Panji-1 exploration well,
which has left thousands living in temporary shelters, forced business
and schools to close and destroyed rice fields.

Remedial efforts to date have had little effect with the mud now
submerging hundreds of hectares of land after the walls of mud
containment dams breached last month.

A study by Greenomics Indonesia estimated that the mud flow had caused
33 trillion rupiah ($3.6 billion) in losses to local people and their
environment as of August.

The other co-venturers in the Brantas block are Medco Energi of
Indonesia with 32% and Australia's Santos, which holds 18%.

EMP said that the divestment is expected to maintain its positive
financial and operational performance, while also continuing Lapindo's
commitment to dealing with the mud flow, which would be fully
supported by the Bakrie Group.

------------------------------------

The Straits Times (Singapore)
Thursday, September 7, 2006

Vietnam aims to build nuclear power plant within 10 years

Its ambitions have met with no opposition as 
many believe Hanoi will comply with UN policy

Roger Mitton, Vietnam Correspondent

IN HANOI - AS BEFITS its status as a growing force in the region,
Vietnam aims to build Asean's first nuclear power plant within the
next decade.

Last week, a team of Japanese nuclear power experts visited Hanoi to
thrash out details over Vietnam's nuclear programme.

Deputy Prime Minister and Foreign Minister Pham Gia Khiem said Vietnam
was undertaking research to develop the nuclear energy industry for
peaceful purposes, which included construction of the country's first
nuclear power plant by 2015 and to have it fully operational by 2020.

Recently, Vietnam Atomic Energy Commission director Vuong Huu Tan told
Chinese news agency Xinhua: 'We will have to import all fuel rods and
equipment for the first plant's two reactors but will strive to
produce them locally for following reactors and plants.

'Potential foreign suppliers are France, the US, Russia, Japan and Canada.'

Vietnam has a booming economy, a young and dynamic workforce and the
second largest population in Asean after Indonesia.

Its burgeoning energy needs make the decision to go nuclear understandable.

But it is also an authoritarian communist-ruled country that has the
largest standing army in Asean.

It fought a bloody border war with China less than 30 years ago, and
it has unresolved sovereignty issues with five other countries over
resource-rich islands in the South China Sea.

However, while the world frets about the nuclear programmes of North
Korea and Iran, Vietnam has quietly embarked on its nuclear scheme
with little fanfare and no objections so far.

The reason is partly because many believe that unlike North Korea and
Iran, Vietnam will comply with United Nations guidelines enforced by
the International Atomic Energy Authority (IAEA).

Said Mr Zachary Abuza, a South-east Asia security expert at Simmons
College in the United States: 'Vietnam has good relations with the UN
system and has taken its multilateral responsibilities seriously. I
believe it will abide by IAEA safeguards and inspections.'

Hanoi plans to locate the first nuclear power station in the central
coastal province of Ninh Thuan. Construction is estimated to cost
about US$4 billion (S$6.3 billion).

Hanoi hopes to get the plant up and running fast because of the
growing energy demands of the booming economy and the region's fastest
growing population.

Vietnam has extensive off-shore oil reserves which are being
developed, but it currently has no refinery capacity. All petrol must
be imported, with much of it from Singapore.

So, like many other countries, it is examining other long term sources
of energy for its burgeoning economy.

Said Professor Marvin Ott, who teaches national security policy at the
National Defence University in Washington: 'It makes perfect sense
that Hanoi would want to develop a civilian nuclear energy capacity.'

Already, Vietnam has built a 500kw experimental reactor at its Dalat
Nuclear Research Institute located in the highlands about 200km
north-east of Ho Chi Minh City.

Despite entreaties from the Nuclear Suppliers Group led by the United
States, Vietnam has resisted moves to ship its high-grade spent fuel
from this reactor to Russia in exchange for replacement grade fuel.

Although the Nuclear Suppliers Group has urged Hanoi to agree to IAEA
safeguard measures, it has not yet formally signed up to obey these
rules.

That stance has caused unease about potential nuclear proliferation,
especially given Vietnam's close ties to some of Asia's most
repressive regimes and its own authoritarian communist government.

Last week, Vietnam celebrated its national day on Sept 2, and although
countries from around the world sent salutations, Vietnam's media only
highlighted the well-wishes from China, North Korea, Laos, Cambodia,
Cuba and Myanmar.

Iran also has close ties to Vietnam, and, like North Korea, it is
known for flouting nuclear proliferation rules and having the
potential to develop nuclear weapons.

There is concern that Vietnam could go down the same path as Pyongyang
and Teheran, especially if it felt threatened by its traditional enemy
China.

Said Prof Ott: 'If I were a Vietnamese defence strategist, I would see
a nuclear weapons capability as potentially useful, primarily to
prevent bullying by China.'

Of course, any move by Vietnam to use its nuclear power industry to
develop nuclear weapons would contravene Asean's strict rules about
keeping South-east Asia nuclear-free.

-------------------------------------

Upstream
September 8, 2006

Yards on blocks for Belut work

Russel Searance

Indonesian construction outfits set for race on Natuna Sea gas project

Indonesian offshore builders are in talks with ConocoPhillips for
major platform prizes related to the North Belut gas project in Natuna
Sea Block B.

A central processing platform is required with a 13,000 to
14,000-tonne topsides installed via the floatover method.

The jacket for North Belut is an eight-leg structure that will weigh
about 5500 tonnes.

In addition, two sizeable wellhead platforms, each weighing up to 4000
tonnes, are required for the project.

Three leading offshore builders with yards in Indonesia are US giant J
Ray McDermott, Singapore's SMOE, and Nippon Steel's local subsidiary.

All these companies have big yards on Batam Island, and all are
understood to have bid for North Belut.

Sources said final negotiations are under way for both engineering,
procurement and construction packages. McDermott and Nippon are said
to be in strong positions.

North Belut is a major field development in Block B, coming hard on
the heels of the Kerisi and Hiu projects.

Both SMOE and McDermott are currently building platform components for
Kerisi-Hiu - the former the topsides for the CPP and a wellhead
platform, the latter the CPP substructure of 7600 tonnes.

McDermott has at least four other major projects under way in Batam -
the Arthit processing platform, the Train 5 LNG modules, the Su Tu
Vang CPP, and two 4000-tonne jackets.

Meanwhile, bids are due soon for the transportation and installation
package for North Belut.

Completion of the CPP jacket fabrication work is targeted for the
first quarter of 2008 with first gas planned later that year.

The platform topsides are due for installation in the third quarter of
2008, and offshore hook-up and commissioning is scheduled for the
fourth quarter.

North Belut will come on stream after the operator's current
Kerisi-Hiu satellite fields development and will be the largest single
structure to be brought on stream using hub facilities on the
operator's producing Belanak field, which is also in Block B.

North Belut's recoverable reserves were earlier estimated at 667
billion cubic feet of gas by co-venturer Chevron but the operator has
never released a reserves figure for the field.

ConocoPhillips expects its own net production from Block B to ramp up
to 45 million barrels of oil equivalent in 2008.

ConocoPhillips has a 40% working interest in the Block B production
sharing contract and its partners are Inpex (35%) and Chevron (25%).

----------------------------------------------------------

Indonesia says aims to raise coal output next year

JAKARTA, September 8 (Reuters) - Indonesia expects to increase thermal
coal production and coal exports next year because of rising demand at
home and across Asia, a mines and energy ministry official said on
Friday.

The government expects thermal coal output to increase 3.5 percent to
around 175 million tonnes in 2007 from an estimated 169 million this
year, Bambang Hartoyo, deputy director of coal development in the
energy ministry, told Reuters.

Coal exports are likely to rise to 128.6 million tonnes from 123.5
million during this period, he said.

Coal consumption has been soaring globally as several markets turn to
the fuel as a source of power generation because of sky-high prices of
oil and gas.

"There has been some expansion of coal mines that will cause
production to rise in 2007," Hartoyo said. "Demand for Indonesian coal
in Asia is still good that's why export will rise slightly in 2007."

Indonesia has abundant coal deposits of around 38.9 billion tonnes,
but about 60 percent of the reserves are of low quality, data from the
mines and energy ministry shows.

Indonesian state power firm PT Perusahaan Listrik Negara has about
21,700 megawatts of electricity capacity in Indonesia. About 30
percent runs on oil products as diesel and fuel oil, while coal and
natural gas dominate the rest.

-----------------------------------------------------------

Indonesia's Arutmin, Kobe Steel develop 68 mln usd 'upgraded brown coal' plant

JAKARTA, September 8 (XFN-ASIA) - PT Arutmin Indonesia said it and
Japan's Kobe Steel Ltd have signed an agreement to develop Indonesia's
first upgraded brown coal (UBC) plant, at a cost of 68 mln usd.

Artumin is a unit of PT Bumi Resources.

Arutmin's vice president Kaz Tanaka said at a signing ceremony for the
plant that his firm will invest 10 mln usd in it with the remaining 58
mln usd coming from Kobe.

Tanaka said the UBC plant, located in Asam-Asam in South Kalimantan,
will use a technology developed jointly by research agencies and
companies in Indonesia and Japan.

"We received full support both from the Indonesia and Japanese
governments in developing the coal plant," Tanaka said.

He said the technology enables the upgrade of low-calorie coal of
below 5, 100 kilo calorie per kilogram (kcal/kg), to a level of more
than 6,000 kcal/kg.

The plant is expected to start "semi commercial" operation in mid 2008
and go into full commercial production by mid 2009. Initially it will
upgrade 1,000 tons of coal per day.

Tanaka said that Arutmin, together with its partner, will boost their
investment to 120 mln usd to bring the plant to full commercial
operation.

The high-calorie coal will be sold mainly for export markets, including Japan.

At today's signing ceremony, Minister for Energy, Purnomo Yusgiantoro,
said that by using the new technology, Indonesia's coal production
could be increased from the current 170 mln tons per annum to between
200-300 mln tons over the next few years.

--------------------------------------------------------

Foreign ships still allowed to transport coal, oil in Indonesia

JAKARTA, September 8 (Xinhua) -- Foreign-flagged ships are allowed to
transport coal and oil and gas within Indonesian waters until 2010 and
this does not violate the country's cabotage rules, a senior
government official said.

Allowing foreign ships to transport coal, oil and gas did not violate
1995 cabotage regulations, Antara news agency quoted Indonesian
Tranportation Minister Hatta Radjasa as saying.

"I will never tolerate any one violating the cabotage principles that
we have already adopted. However, based on the road-map for our
shipping industry, the operation of foreign ships to handle shipments
of coal, oil and gas is still allowed, while the operation of foreign
ships to transport other commodities such as rice, wood, cement and
fertilizer has been prohibited since 2005," the minister said on
Thursday.

He was commenting on a protest made by a senior executive of the
Association of Indonesian Shipowners (INSA), who said that the
government's recent decision to allow foreign flagged ships to
transport coal from Kalimantan to coal-fired plants in Java violated
regulations.

"If INSA does not have enough ships to do the job, why we are not
allowed to hire foreign ships," he said.

--------------------------------------------------------------

Indonesian govt offers incentives to build copper smelter

JAKARTA, September 8 (Asia Pulse/Antara) - The Indonesian government
said it will guarantee supply of raw materials for investors building
smelters to process copper, gold and silver concentrates in the
country.

If necessary, U.S. PT Freeport Indonesia, the largest producer of
copper concentrate in the country, will be asked to stop exports of
the commodity, Mineral, Coal and Geothermal Director General Simon
Felix Sembiring said.

The government will also guarantee captive market for the smelters, Simon 
said.

Freeport, which operates in Papua, will not be allowed to take part in
the new project to build smelter, he said, adding, "If Freeport is
allowed it will be the one to reap the profit again."

The country has a smelter processing copper concentrate namely PT
Smelting, which 25 per cent owned by Freeport. It was built in 1996 at
a cost of US$500 million.

Simon said with available basic material and guaranteed market, local
companies should be serious in planning the project.

Freeport will have to terminate all of its contracts with buyers abroad.

In 2005, the company sold its concentrate in 2005 to Spain, Japan,
India, the Philippines, South Korea, China, Finland, Germany and
Bulgaria.

----------------------------------------------------------------

Platts Commodity News
September 8, 2006

Indonesia's GT Petro to shut down MEG line on high ethylene costs

Indonesia's GT Petrochem will shut down its 96,000 mt/year No 1
monoethylene glycol line in Merak on September 20 due to negative
margins resulting from high ethylene feedstock prices, a company
source said. The line was running at 100% capacity as of early Friday.

The company will also shut down its 120,000 mt/year No 2 MEG line in
Merak for 4-5 days in September as the company is in the process of
installing a new coal-fired boiler. The shutdown is necessary for the
installation and to allow new pipelines to be laid.

Ethylene prices were assessed at $1,495/mt CFR Southeast Asia on
Thursday, but MEG spot offers were as low as $920/mt CFR China on
Thursday with almost no bids heard in the market. This showed the
market to be at least $35/mt lower on the week as MEG weekly prices
were pegged at $950/mt CFR China on September 1. GT Petrochem needs to
sell MEG at $1,100/mt FOB Indonesia, or $1,120/mt CFR, to break even
on ethylene costs.

In related news Friday, MEG producer Shell nominated its Asian
contract price for October at $1,020/mt CFR Asia, $30/mt above its
September nomination. A company source attributed the hike to a
healthy derivative polyester market and soaring upstream ethylene
costs. He said MEG supply remained in tight regional balance as plants
have been cutting back on operation rates due to soaring ethylene
feedstock costs.

-----------------------------------------

Pertamina Headlines,
Thursday, September 7 and 
Friday, September 8, 2006

Oil/Gas:

Friday, September 8: 

- Elnusa launches new workover barge
- Medco sees divestment of Lapindo 
  as getting rid of responsibility
- Pertamina may seek new partner 
  to develop Natuna gas field 

Thursday, September 7:
  
- Pertamina to invite bids to build tankers
- Pertamina stops producing leaded gasoline
 
Mining: 

Friday, Sept. 8: 

- Indonesia, Japan team up to build UBC 
  facility at Arutmin's Asam-Asam mine
 
Thursday, Sept. 7:
 
- Call for probe into TNB's failed venture 
  in Indonesia
- Canadian junior to acquire Indonesian 
  coal properties
- RELEASE: S&P affirms B+ on 
  PT Adaro Indonesia
- Shipping activities in Barito river limited
- Indonesia lacks ships to transport coal
- Signing Rio Tinto CoW likley delayed
- Bumi plans further production increase
- Kideco secures 1.5 MT coal supply 
  contract to Suralaya
- NT Holding expands Indonesian 
  coal business
 
Power: 

Friday, Sept. 8: 

- West Java will tender three geothermal fields
 
Thursday, Sept 7:
 
- Medco to start construction of Sarulla 
  geothermal power project next year
 
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Joyo Indonesia News Service
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