Exxon may bow to govt pressure on Natuna gas block: Report

Visiting ExxonMobil Senior VP Mark Albers signaled on Wednesday that the company might bow to government?s pressure to reduce its split from 100 percent (before tax) to 35 percent in Natuna D Alpha giant block, where both parties are now negotiating for contract extension, local medias reported Thursday.

He said after meeting with VP Jusuf Kalla that ExxonMobil wished that negotiation could focus on commercial side.

ExxonMobil Oil Indonesia spokesperson Maman Budiman, however, said that the figure was yet finalized as negotiation is still ongoing.

Exxon controls a 76 percent stake in the Natuna block while state oil and gas firm, Pertamina, owns 24 percent and would like to increase its stake to half.

Exxon and the Government of Indonesia are involved in negotiation on Natuna block after Indonesia said Exxon?s contract on the block has expired, whereas the Exxon has said the contract is valid until 2009.

The Natuna D-Alpha block has around 222 trillion cubic feet (tcf) of gas reserves, of which about 46 tcf is thought to be commercially recoverable.

Albers also complained to Kalla about the slow pace of land acquisition for Cepu oil, gas block in Central/East Java, which threatened to further delay first from the block. However, Hestu Bagyo, CEO of Pertamina EP Cepu, which is Exxon?s equal partner in the block, said that the slow pace was due to ExxonMobil?s ?inflexibility? in dealing with locals.(*)