ExxonMobil talks with Petronas on Natuna gas sale
Thursday, October 12 2006 - 11:09 AM WIB
ExxonMobil Indonesia (EMOI)?s vice president for commercial, planning and public affairs Maman Budiman said on Thursday that both companies were talking about a possible supply amounting to 1 billion cubic feet per day (BCFD) of natural gas from the block in South China Sea to Bintulu located in Malaysia?s state of Serawak. Bintulu is about 300 kilometers from D-Alpha block.
He said deal might be closed by the year-end.
He said ExxonMobil was also talking with some parties to supply the Natuna gas for domestic users, including those in Batam, which is about 800 km from the field.
?The talk with Thai firm PTT (on possible supply to Thailand) is also ongoing,? Maman said. D-Alpha block is about 800 km from the coast of Thailand.
Maman made the statement in response to the announcement by Minister of Energy and Mineral Resources Purnomo Yusgiantoro on Tuesday that ExxonMobil?s contract on the Natuna D-Alpha block had expired and the government had asked the firm to ?check out? of the block.
According to Purnomo, ExxonMobil should get out of the block because its contract has expired that there were no signs that ExxonMobil would develop the field. ExxonMobil has however countered, saying it still has the right to stay in the block until 2009 in line with its exploration permit.
On Wednesday, Purnomo softened stance on the issue, saying that the government only wanted better more favorable split and that the gas reserves from the block could be exploited to meet domestic market demand.
The D-Alpha block is said to have 46 trillion cubic feet of natural gas but the high carbon dioxide contents in the gas make it the production of the gas very expensive.
EMOI?s president director Peter Coleman reiterated on Thursday the company?s opinion that it still had the right to hold the block until 2009.
The statement by the government that its contract has expired come from a different interpretation of the contract owned by the firm, he said, adding that the firm would soon meet with the government to clarify the issue.
Coleman reiterated the development of the D-Alpha block? natural gas will be very costly.
The firm needs to invest US$10 billion for 1 billion cubic feet per day of sales gas, he said.
Still, ExxonMobil was committed to developing the project, he said, adding that the firm may start developing the project as early as 2008.
?We expect the project to come on stream as early as 2013,? he said. (Alex/Godang)