ExxonMobil to sell Cepu gas to Indonesia

A unit of ExxonMobil Corp. has signed a memorandum of understanding to supply natural gas from its Cepu Block to Indonesia’s state-owned power utility PT Perusahaan Listrik Negara (PLN) and state gas distributor PT Perusahaan Gas Negara (PGN).

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Jan. 29 -- A unit of ExxonMobil Corp. has signed a memorandum of understanding to supply natural gas from its Cepu Block to Indonesia’s state-owned power utility PT Perusahaan Listrik Negara (PLN) and state gas distributor PT Perusahaan Gas Negara (PGN).

"The MOU was signed last year. PLN will use the gas for its power plants and PGN for the city gas project," ExxonMobil Indonesia spokesman Maman Budiman told a hearing with the House of Representatives Commission VII, which is overseeing the country’s energy and mineral resources.

Maman said the gas will be produced from Cepu Block’s Jambaran field, which has reserves estimated at 1.3 tcf, all of it to be allocated to the two state-owned enterprises. Maman said discussions are under way with the buyers concerning the details of volume and price.

Maman also discussed the block’s oil production, saying ExxonMobil’s subsidiary Mobil Cepu Ltd. (MCL) is able to meet the government’s production target of 20,000 b/d, but that the downstream facilities to deliver and process the oil belong to other companies that are not ready to receive the crude.

“We can actually produce up to 25,000 b/d, but the receiving facilities are still unable to receive all the output,” said Maman, whose statement was confirmed by R. Priyono, chairman of upstream oil and gas regulator BPMigas.

“PT Tri Wahana Universal currently can only receive between 3,000 and 6,000 b/d and PT Pertamina can only receive between 10,000 and 12,000 b/d,” said Priyono, who added, “We are still evaluating the possibility that Pertamina could increase its capacity to between 14,000 and 15,000 b/d.”

Indonesia has high expectations that production from the Cepu Block will help to reverse the country's overall declining oil production, expecting the block to produce 20,000 b/d since the end of 2008—a target that has yet to be reached.

MCL holds a 45% interest in Cepu Block, while Pertamina holds 45%, and the remaining 10% is held by a consortium of enterprises controlled by the provincial administrations of East and Central Java.

Contact Eric Watkins at hippalus@yahoo.com.

More in Companies