ExxonMobil pulls out from East Natuna project

By Godang Sitompul

ExxonMobil has decided to pull out from the planned development of the East Natuna block, in Riau Islands Province, as the project is considered to be not commercially feasible under current terms and conditions.

ExxonMobil Indonesia Vice President for Public and Government Affairs, Erwin Maryoto said that the company made the decision following recent completion of the technology and market review of the project.

?After completing the technology and market review, ExxonMobil does not longer wish to continue further discussions or activities involving the East Natuna,? Erwin said.

ExxonMobil is part of a consortium led by Indonesia?s state-owned oil and gas firm PT Pertamina assigned by the government to develop the gas-rich East Natuna block. The other member of the consortium is PTT of Thailand.

Erwin said that the company?s decision over the East Natuna project will not affect its other projects in Indonesia, and that the company is also open to other opportunities in the country.

Director General of Oil and Gas at the Ministry of Energy and Mineral Resources IGN Wiratmaja Puja confirmed that ExxonMobil has decided to pull out from ongoing negotiations over the planned East Natuna project as it is considered to be not economically feasible under the current terms and conditions. He said that based on the technology and market review, the gas price from the project at the upstream level would reach over $10 per mmbtu, which moves against the government?s policy to bring down gas price at home to around $6 per mmbtu to help boost competitiveness of domestic manufacturing industries.

Pertamina Upstream Director Syamsu Alam said that Pertamina would not be able to go alone in the planned East Natuna project due to the high risk and huge investment requirement. As such, he said, the company must look for new partner to be able to proceed with the East Natuna project.

The East Natuna block, formerly called D-Alpha, is estimated to hold up to 200 tcf of gas reserves, the largest gas reserves ever found in Indonesia. However, only 46 tcf of the gas is said to be recoverable due the high CO2 element contained in the reserve. In the early phase, the consortium aims to accelerate oil production with a target of 7,000-15,000 bopd once the PSC has been signed.

Editing by Reiner Simanjuntak