AAF to send home 800 workers

Ammonia, Urea, and hydrogen peroxide producer PT Asean Aceh Fertilizer (AAF) will temporarily lay off 800 workers due to natural gas unavailability for almost two years already. The decision is expected to be taken in a shareholders meeting scheduled July 16.
AAF president director Rauf Purnama said the company's future is very much rely on newly developed gas fields in Block A, off Malacca Strait.
"But we have to wait two more years to get gas supply from these fields," he said yesterday after a meeting with Indonesian vice president Jusuf Kalla as quoted by Kompas today.

AAF shareholders are Indonesian government with 60%, while Malaysia, Philippines, and Thailand governments with 13% respectively, and Singapore with 1%. AAF started its ammonia and urea production in early 1970s, while its hydrogen peroxide plant went on stream just few years ago.

AAF needs average of 60 MMSCFD of natural gas supply that previously supplied by PT Exxon Mobil Oil Indonesia (EMOI) Inc. But EMOI itself is struggling to fulfil its LNG export contract to Japanese customers.

INDEF & APP versus Vulture Investors

Is it a coincidence that three staffs of INDEF (Institute for what?), Iman Sugema, Aviliani, and Usman Hidayat published two articles at two major newspapers at the same time with the same message?

Today, Tuesday, July 12, Kompas published Iman’s article titled Activities of Vulture Investor while Bisnis Indonesia published Aviliani and Usman’s with title Learning from corporate debt restructuring…

Last week, Bisnis Indonesia (July 5) also run M Fadhil Hasan's article titled Bad Vulture Investor & APP. Fadhil is director at INDEF.

While their writing structure quite different, the messages are all the same. Both articles cited the only case of Asia Pulp & Paper. Both agreed that APP is a victim of vulture investors. No counter argument at all, things that should be done by those who claimed themselves as analysts.

I could understand if INDEF is taking side with APP. But how come both newspapers didn’t edit these imbalanced articles carefully? Did they just too naïve to believe in INDEF’s claim of independency or to believe that these articles came out of nowhere all of a sudden for free? It is an advocacy for APP or a kind of advertising that newspapers should charge upon…

Both Iman’s and Aviliani’s article failed to consider how much loss APP has made to the state, to the Indonesian people?

We have to remember that APP is no saint. APP left Bank International Indonesia (BII) with trillions of bad debts that should be bailed out by government bonds.

Gas feedstock problem at Aceh's fertilizer plants

For almost a decade, urea fertilizer plants in Aceh province, Indonesia has struggled to secure natural gas supply from next door gas producer PT Exxon Mobil Oil Indonesia (EMOI) Inc. Initially, there were two urea plants operated separately by PT Pupuk Iskandar Muda (PIM) and PT Aseah Aceh Fertilizer (AAF) with combined capacity of around 1.2 million tones per year. Both plants have already been in operation since 1970s. They relied on the same source with liquefied natural gas (LNG) plant operated by PT Arun LNG, a joint venture between Pertamina, Exxon, and Japanese companies.
But depleting natural gas reserves combined with long military conflict in the surrounding area of Lhokseumawe, Aceh between Indonesian military (TNI) and Free Aceh Movement (GAM), had worsened gas supply for both PIM and AAF. In the meantime, both companies embarked on expansion projects which significantly needs additional gas supply. AAF built a hydrogen peroxide plant, while PIM built the second ammonia and urea units with additional capacity of 330,000 tones and 570,000 tones per year respectively.
Both projects were supposed to get natural gas supply from other sources than EMOI which is new gas fields off Malacca Strait. But until the kick off operations of both new plants, no new gas sources onstream. As expected, it's a fiasco. AAF and PIM have to run their plants on and off, largely depend on level of gas output produced by EMOI and their export commitment to Japanese LNG customers.
Despite Indonesian government's efforts to ask EMOI to supply gas to PIM and AAF (both state-owned enterprises), none of the plants could run at normal operating rates. Government then let PIM to export most of its output so it could buy natural gas to fulfil EMOI's export commitment. Government and PIM is said to have started negotiation with other LNG producers in Qatar to meet long-term demand for PIM. Would it be a good solution?