Conoco asked to soon make decision on Block A gas field
Thursday, September 22 2005 - 02:26 AM WIB
“I really hope ConocoPhlillips will be able to settle the problem as soon as possible,” Minister of Energy and Mineral Resources Purnomo Yusgiantoro was quoted as saying. The minister said that ConocoPhillips should decide soon whether or not it would retain or sell its 50 percent interest in the oil block so that the government would be able to prepare the development of the oil block.
“The development of the oil block is quite important to ensure that the existing fertilizer producers in Aceh will get sufficient gas supply,” he added.
The Block A gas field which is estimated to hold about 600 billion cubic feet of gas is jointly owned by ConocoPhillips and ExxonMobil Indonesia, each with a 50 percent interest.
The two companies are reluctant to begin the development of the gas field although the government has agreed to reduce the portion of its production split from the oil block to 52 percent from about 70 percent stated in the contract. They said that the development of the gas block is still too costly despite the government’s agreement to lower the production split.
A number of companies including Medco Energy and Star Energy have expressed their keen interest to take over the gas field. Exxon has agreed to sell its 50 percent interest but the fate of the remaining 50 percent interest held by ConocoPhillips remain uncertain.
The development of the gas field is expected to cope with the shortage of the gas supply to the Arun LNG plant and nearby fertilizer producers PT Pupuk Iskandar Muda and Asean Aceh Fertilizer (AAF).
The LNG plant and fertilizer producers receive the gas supply from the Arun gas field but the gas supply continues to decline due to the depletion of the gas reserves at the field. (*)