Indonesia to reassign Natuna gas block

Nov. 3, 2006
Indonesia's Energy and Mineral Resources Minister Purnomo Yusgiantoro said a Cabinet session will be required to decide what to do with the giant Natuna gas block project.

Eric Watkins
Senior Correspondent

LOS ANGELES, Nov. 3 -- Indonesia's Energy and Mineral Resources Minister Purnomo Yusgiantoro said a cabinet session will be required to decide what to do with the giant Natuna gas block project. Last month it terminated the development contract awarded to ExxonMobil for failure to submit a plan for developing the block and selling the gas.

On Nov. 2, Indonesian Vice-President Jusuf Kalla defended the government's decision, saying the company had not done much on the block since signing the contract in 1985.

Purnomo said three options have been prepared for the Cabinet's consideration:

-- Handing over the project to state-owned oil company Pertamina.

-- Holding a new tender.

-- Renegotiating the contract with ExxonMobil under certain terms and conditions, especially on production split.

The government said it wants a share of the production if the ExxonMobil's contract is renewed. Under the old deal, the project was 76% owned by ExxonMobil and 24% by Pertamina, with no separate share for the government.

ExxonMobil Oil Indonesia's vice-president for planning, commercial and external relations, Maman Budiman, said the firm is ready to discuss the terms and conditions of developing Natuna, which has natural gas reserves estimated at 222 tcf with a high concentration of carbon dioxide.

Kardaya Warnika, head of Indonesia's oil and gas regulating body BP Migas, on Nov. 3 told local media that the negotiations will begin this month and will conclude in January 2007. The proportion of the production shares will be changed, he said.

Contact Eric Watkins at [email protected].