Higher Natuna stake urged for Pertamina

Indonesia wants state-owned PT Pertamina to increase its stake and operate the Natuna D-Alpha natural gas block, even as negotiations with ExxonMobil Corp. are under way.

Eric Watkins
Senior Correspondent

LOS ANGELES, July 5 -- Indonesia wants state-owned PT Pertamina to increase its stake and operate the Natuna D-Alpha natural gas block, even as negotiations with ExxonMobil Corp. are under way.

"We want Pertamina to increase its equity (in the block) and become the operator," said Energy and Natural Resources Minister Purnomo Yusgiantoro. ExxonMobil holds a 76% stake in the block, while Pertamina holds the remaining 24%.

"We are also targeting a better split under the renegotiated contract," Purnomo said. Official media said under the old contract, the production split between ExxonMobil and the government was 100% to zero. At other fields, the split is said to be 30%-70% in favor of the government.

Maman Budiman, ExxonMobil vice-president for public affairs, declined to comment on the suggestion that the government would appoint Pertamina as the operator of the block, saying that negotiations are still under way.

The block, which is estimated to hold 46 tcf of gas, has become the subject of a dispute between ExxonMobil and the Indonesian government (OGJ Online, Jan. 19, 2007).

In 1980, the company secured a 25-year contract to develop the block. In 1995, ExxonMobil won a revision to the contract allowing it to operate the block until 2009 on condition that it made "significant progress" in developing it.

The government, however, claimed that the contract was terminated in 2005 on the grounds that ExxonMobil had failed to make any significant progress in developing the block—a claim ExxonMobil denies.

To resolve the dispute, the government 3 months ago formed a special team, called the Natuna Block Management Committee, to renegotiate the contract with ExxonMobil. These negotiations continue.

Contact Eric Watkins at hippalus@yahoo.com.

More in Drilling & Production