BPMIGAS warns ExxonMobil to develop Natuna block or lose contract

ExxonMobil Oil Indonesia Inc must develop the Natuna gas block in the South China Sea and find a buyer for it before the US energy firm is entitled to a contract extension, said an official from oil and gas regulatory body BPMIGAS said Wednesday.

BP Migas chairman Kardaya Warnika said ExxonMobil's contract over the Natuna block would expire in 2007 if without contract extension.

"If ExxonMobil doesn't get buyers in two years' time, there's no reason why we should extend the contract," he said.

ExxonMobil has secured two MoU's with Petronas and Tahiland's PTTEP to conduct joint study on developing the huge gas reserves, including piping the gas to Malaysia and Thailand, but Kardaya said MoU's meant nothing as they were not leaglly binding.

"What we need is gas sales agreements," he said.

The Natuna D-Alpha gas field, located approximately 850 miles from Java, was discovered in 1973 and has estimated recoverable hydrocarbon resources of 46 trillion cubic feet (TCF) of natural gas. ExxonMobil has a 76 percent share in the Natuna gas field PSC, with PT Pertamina holding the remaining 24 percent.

Exploitation of the resources is a complex technical challenge and high cost due to the large size of the field and a gas composition of approximately more than 70 percent carbon dioxide.

Oil and gas firm PT Medco Energi Internasional said earlier this month it was interested in joining a consortium to develop the Natuna block should ExxonMobil's contract expire without an extension.(alex)