ExxonMobil can run Natuna until June 2007: Official

The government has given a deadline until June for U.S oil giant firm ExxonMobil Corp. to fulfill all its obligations with third party in Natuna D-Alpha oil and gas block. The deadline for the fulfillment of obligations will be counted from December 2006.

Ministry of Energy and Mineral Resources' director of upstream business development Priyono said that upon completion of ExxonMobil's obligation, the Natuna's status will be decided. The government wants the whole process to be finished legally.

?Minister (Minister of Energy and Mineral Resources) gave orders to examine all legal aspects first and ExxonMobil's obligations to third parties. After this, a decision will be made,? Priyono said in Jakarta on Thursday.

?It was not a negotiation for extension of the contract,? Priyono said. Because, both the government and the Upstream Oil and Gas Regulator, BPMIGAS have said the contract was expired. Currently, the termination of the contract is still under process.

?In terms of administration, Energy and Mineral Resources Ministry has agreed on the recommendation of the BPMIGAS regarding termination of the contract,? Priyono said.

In anticipation of the consequences, the government has prepared three options to determine the status of Natuna D-Alpha block, he said.

First, the government will declare Natuna D-Alpha as an open area so that Pertamina has special right to manage the Natuna D-Alpha block in line with the Government Regulation No. 35/2004. The second option is to call for tenders, which means Pertamina will lose its special right and it has to compete with other contractors. The third one is direct offering.

Director general of oil and gas Luluk Sumiarso said these three options will be effective if the contract with ExxonMobil is terminated.

In November 2006, BPMIGAS was in talk with ExxonMobil on operating rights for the Natuna D-Alpha block and is expected to be completed in January.

"We are ready to renegotiate with Exxon on Natuna D-Alpha block. If we talk about the terms and conditions, then it won't be too long ... It will at least take about three months," said BPMIGAS head Kardaya Warnika on Nov 16, 2006.

Government declared Exxon?s contract in Natuna D-Alpha block lapsed after the company failed to meet its commitment to develop the block.

Pertamina has a 24 percent stake in the Natuna D-Alpha block, while Exxon has 76 percent. (*)