Eni seeks partner for Aceh gas project: Report

Eni SpA, Europe's No. 4 oil producer, said it's seeking a partner to help explore natural gas fields off the Indonesian province of North Sumatra to supply the Arun liquefied natural gas plant, Bloomberg reported recently.

Eni Indonesia is offering as much as a 50 percent stake in the Krueng Mane production-sharing contract, an area holding at least 4.5 trillion cubic feet of natural gas in waters of 200 meters to 1,300 meters depth, said Andy Mortimer, the company's new-ventures coordinator.

"We're looking to divest some of the risk," Mortimer said in an interview. "Gas already committed to Arun is not enough to meet its capacity. This is an opportunity for a large to medium- sized oil company to get into the LNG business without having to commit massive resources."

PT Arun NGL, Indonesia's second largest liquefied natural gas plant, produces about 1.5 billion cubic feet of natural gas a day and 25,000 barrels per day of condensates, a by-product of gas production. Arun processes natural gas into a liquid for export to South Korea and Japan by ship.

"Security has made North Sumatra a problem for some companies," Mortimer said. "But the Krueng Mane block is offshore and therefore free from the security issues that can affect onshore exploration and production projects."

Aceh has been under martial law since May 19 after President Megawati Soekarnoputri authorized military force to quell a separatist rebellion.

The 50 percent share offered by Eni Indonesia could be split between two companies, Mortimer said. The company will open a data room in Jakarta on Nov. 3 for prospective partners to view the results of seismic surveys conducted on the area.

"If it's the right company we will sell it at $2 million," Mortimer said. Eni is seeking a partner with expertise and resources to develop deep water areas of the exploration site.

Eni Indonesia, which was awarded the area in September 1999, has spent $18 million to date exploring the site. No commercial discoveries have yet been made in the area. The JAU discovery within the Kreung Mane area holds proven undeveloped gas reserves of 190 billion cubic feet.

"We hope before the end of the year to have a new partner in the block," said Giuseppe Moscato, exploration team leader, for Eni Indonesia.(*)