Indonesia looks to increase share in Natuna block

Indonesia is looking to increase its share in the Natuna D-Alpha natural gas block, formerly operated by ExxonMobil Corp.

Eric Watkins
Senior Correspondent

LOS ANGELES, Oct. 5 -- Indonesia is looking to increase its share in the Natuna D-Alpha natural gas block, formerly operated by ExxonMobil Corp., and to evaluate other oil and gas contracts with foreign investors.

Vice-President Jusuf Kalla said the government is seeking a 60% share in the Natuna D-Alpha block, which originally was awarded 100% to then-Exxon Corp. in 1995. Kalla said the government plans to evaluate other oil and gas contracts with foreign investors as those agreements are no longer viewed as sufficiently beneficial for the country.

ExxonMobil's contract for Natuna block was terminated in January 2007 following government claims that the firm had failed to carry out the project. Now, the two sides are resuming negotiations on different terms.

The government's increased demands over Natuna are perhaps spurred by increased international interest in the development. In September Thailand's state-owned PTT PLC suggested the Vietnamese and Malaysian governments consider a three-way joint venture to develop the gas field.

PTT tried to buy the license from Exxon Corp. a decade ago, but withdrew its offer citing high operating costs. "At that time, we determined that the field was not viable to operate, that it was too costly," said Chitrapongse Kwangsukstith, PTT senior executive vice-president.

The Natuna block holds an estimated 46 tcf of recoverable natural gas, but reports say it has never been developed due to its high carbon dioxide content and its distance from markets.

Energy and Natural Resources Minister Purnomo Yusgiantoro earlier said, "We want Pertamina to increase its equity (in the block) and become the operator" said. ExxonMobil holds a 76% stake in the block, while Pertamina holds the remaining 24% (OGJ Online, July 5, 2007).

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

Contact Eric Watkins at hippalus@yahoo.com.

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