East Natuna gas project might be suspended
ExxonMobil shows no serious commitment in developing the massive project
Monday, August 7 2000 - 03:00 AM WIB
The government might suspend the development of massive natural gas fields in East Natuna as consortium led by ExxonMobil to develop the project showed no serious commitment to carry out the US$20 billion gas project.
Gatot Karyoso Wiroyodo, the director for exploration and production at the state oil and gas company Pertamina, said on Saturday that Minister of Mines and Energy Susilo Bambang Yudhoyono was waiting for an approval from President Abdurrahman Wahid about his proposal to cancel the massive gas project.
According to Gatot, the minister wanted the President to review the contract because the existing production sharing agreement only benefits the consortium.
"Exxon-Mobil boss recently asked for a clarification about Pertamina's position, and I told him that Minister of Mines and Energy has asked the President (Abdurrahman) to cancel the project. After the meeting, Exxon-Mobil did not say anything about the possibility of giving a new pledge," he was quoted as saying by Bisnis Indonesia daily.
The contract, which was awarded to ExxonMobil and the other members of the consortium during the former president Soeharto's administration, gives too much benefit to the contractor. "If we do not review the contract, it would harm the existing production sharing arrangement with other gas developers," he added.
The cancellation of the natural gas field in East Natuna, which has proven gas reserves of 46 trillion cubic feet, is needed for the sake of the whole people, he stressed. Moreover, ExxonMobil and other consortium members should, according to contract, return the project to the government if it fails to carry out commercial production by the year 2004, he noted.
According to an initial plan, the massive gas fields will be developed by a consortium of Pertamina, with 24 percent interest, ExxonMobil with 26 percent and Esso Natuna Limited with 50 percent.
The commercial production is expected to start in 2004 and for the initial stage, the gas will be supplied through pipelines to Java to support major power plants on the island. Thailand has also expressed interest to buy the gas from the East Natuna project.
Several Japanese companies including Japan Petroleum Exloration Co., Teioko Oil Co. Mitusubishi Corp, Mitsui, Nisso Iwai Corp and Itochu Corp., have also expressed their commitment to help finance the project. (*)