MARSHALL ISLANDS FACE FUEL SHORTAGE

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By Giff Johnson

MAJURO, Marshall Islands (Marianas Variety, Jan. 2) — Officials in Majuro were scrambling as the New Year approached to ensure that the power company in the Marshall Islands’ second most populous urban center will have fuel to keep the lights on in January.

With Mobil Oil Micronesia pulling out of service to both Ebeye and Jaluit islands effective January 1, government officials are worried that Ebeye could run out of not only diesel for its power plant but also gas and kerosene.

An agreement between Guam-based Mobil, an ExxonMobil subsidiary, and Majuro-based contractor Pacific International Inc. that would see PII take over both fuel delivery and operation of tank facilities on the two islands is still under negotiation.

Meanwhile, the Majuro-based Marshalls Energy Company, which itself has only about a three week supply of fuel left, has a two million gallon diesel delivery arriving mid-next week, and is negotiating with various local companies to deliver some of this fuel to Ebeye’s power company to prevent the power company running out, according to a company official. But that delivery will be cutting it close as the Ebeye power operation is reported to have fuel only to last into the first week of January.

Mobil Oil Micronesia public relations and government affairs manager Cecile Bamba Suda said late last week that Mobil has determined that it is no longer commercially viable to maintain operations at Ebeye and Jaluit, a remote outer island that before World War II was the Japanese headquarters for the Marshall Islands.

"Mobil has advised the Marshall Islands government and our customers of our operational changes in Ebeye and Jaluit," she said. "Customers on those islands will be able to purchase fuel ex-Majuro and arrange shipment to Ebeye and Jaluit via Pacific International Inc.."

The loss earlier this year of contract with the Marshalls Energy Company estimated at about $30 million annually has "triggered a review of our operations (in the Marshall Islands)," Suda said. Although Majuro, the capital, "remains a viable market," Suda said that Mobil has decided that "in Ebeye and Jaluit it is no longer commercially viable for Mobil to maintain fuel supply operations due to a need to invest at Ebeye with no long-term tenure for land lease, limited commercial opportunities due to market size, significant changes in shipping costs and the impact on operating costs in the Marshall Islands with the loss of MEC volumes."

Because of this situation, "it no longer makes sense for us to own on-island assets in Ebeye and Jaluit and to serve the markets directly," she said.

Mobil’s reduction in service — which was first announced about three months ago — does not present a major problem for Jaluit because of its small population, but the "concern is Ebeye," MEC board chairman and Public Works Minister Matt Zackhras said in an interview. Ebeye has a population of about 12,000 people next to the US Army’s missile testing range at Kwajalein, where many islanders are employed.

A big issue on Ebeye is also gas and kerosene. Zackhras said that "80 percent of the community on Ebeye uses kerosene to cook." Mobil has provided all three fuels to Ebeye for more than 15 years.

Mobil presented a proposal to the Marshall Islands government for the Marshalls Energy Company to take over its fuel operations in Ebeye and Jaluit, Zackhras said. "But for MEC to make a decision, we need an independent survey of both facilities. We can’t just take over. There are so many unknowns such as the condition of the facilities."

More recently, Mobil has approached Pacific International Inc. to take over the facilities and fuel delivery.

PII CEO Jerry Kramer confirmed that PII is negotiating with Mobil, but added that the negotiations need assistance from the Marshall Islands government.

He said negotiations will take more time to complete.

"We have the wherewithal to deliver fuel (to Ebeye and Jaluit)," Kramer said. "We’re the only Mobil-certified contractor in all of Micronesia and because of that Mobil approached us (about the Ebeye and Jaluit package)."

Suda confirmed Mobil has been discussing sale of the Ebeye and Jaluit facilities. "We have had discussions with the Marshall Islands government as we recognize they may see a strategic interest in these assets," she said.

"We have also had discussions with other third parties.

"If we are unable to come to an arrangement with the Marshall Islands government or a third party, Mobil intends to discontinue operation and commence mothballing or demolishing its Ebeye and Jaluit facilities under our global environmental standards."

Zackhras said the government supported private sector involvement in the fuel operation.

The government’s main concern is to keep lights on Ebeye. "We’re just trying to work it out so there is no disruption (in fuel delivery), especially for Ebeye," he said.

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