Govt asks Pertamina to prepare development plan for Natuna block

The government has officially asked state owned oil and gas company PT Pertamina to prepare plans for the development of the Natuna D-Alpha gas block in South China Sea, which American energy giant ExxonMobil Corp. still claims as its property.

?After giving ExxonMobil two years (to negotiate the contract on the block) and the negotiation has brought no results, the President has asked Pertamina to prepare itself (to develop the block),? Minister of Energy and Mineral Resources Purnomo Yusgiantoro said after a limited Cabinet meeting at the palace on Tuesday.

He said Pertamina had been given three weeks to prepare a plan for the development of the block and submit it to President Susilo Bambang Yudhoyono.

He noted that the Natuna D-Alpha block would become the country?s largest ever gas project with a total of investment of at least US$30 billion.

?Three weeks from now, Pertamina will submit feasibility study and preparation reports. It will also report who their partners (to develop the block) will be,? Purnomo said.

The meeting was also attended by Vice President Yusuf Kalla, Coordinating Minister of the Economy Boediono, Coordinating Minister of Public Welfare Aburizal Bakrie, Coordinating Minister of Politics, Law and Security Widodo AS, Cabinet Secretary Sudi Silalahi, Minister of Home Affairs Mardiyanto, State Minister of State Enterprises Sofyan A. Djalil, Pertamina?s president director Arie Soemarno and BPMIGAS?s chairman Kardaya Warnika.

According to Purnomo, the meeting also agreed to form a governmental team to handle the ?macro? aspects of the development of the block, including the border issue.

When asked for comments, ExxonMobil said it had not yet been informed about the government?s decision.

?We have not yet been advised by the government on this. We will decide on a future course of action if such a decision is communicated to us. We hope that these discussions can be completed in the near future and we can resume our project commercialization activities with Pertamina with the full support of the Indonesian Government,? ExxonMobil Indonesia?s communication managers Deva Rachman said in a statement.

After the limited Cabinet meeting on Tuesday, Ari acknowledged that developing the block would become a tough job for Pertamina. The state company has to apply three advanced technologies to develop the block: the technology to remove CO2, the technology to store CO2 and the technology to operate in 400-meter-deep offshore areas.

?If realized, the block will have an offshore platform measuring five or six times a soccer field, the largest in the world,? he said, adding that another challenge to be faced by Pertamina is how to raise funds to finance the project.

He said several companies, including StatOil, Shell and Total, have voiced interest to join Pertamina in developing the block.

ExxonMobil and the government were involved in negotiation on Natuna block after the government claimed that ExxonMobil?s rights were terminated in 2005 and the firm had failed to show any progress in developing the field. ExxonMobil denied the claim, saying it had spent approximately $400 million for exploration of the field, which gave it the right to an extension 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

ExxonMobil controls a 76 percent stake in the Natuna block while Pertamina, owns 24 percent. (godang)