Govt backs Pertamina to take majority stake in Natuna

The government has voiced support for state oil and gas company PT Pertamina to take a majority stake in the Natuna D-Alpha gas block in South China Sea, which is now controlled by American energy giant ExxonMobil Corp.

 

“If Pertamina wants a majority (stake in the block), that’s one of the targets of the current negotiation with ExxonMobil. The target is (to enable) Pertamina to get a majority stake and the government to get a higher split,” Minister of Energy and Mineral Resources Purnomo Yusgiantoro told reporters on Thursday.

 

ExxonMobil now has 76 percent stake in the block, while Pertamina has 24 percent.

 

The government has forced the American company to go to a negotiation table to review its contract after claiming that the contract has expired. ExxonMobil initially insisted that the contract was till valid but later agreed to negotiate on the contract. The government is represented by oil and gas upstream authority BPMIGAS in the negotiation.

 

Vice President Yusuf Kala said on November 17, 2006 that under the ExxonMobil contract, the government did not have any share in the block’s output. This is in contrast with all other production sharing contracts that give the government up to 70 percent of gas output.

 

“The contract does not make sense,” Yusuf said.

 

The Natuna D-Alpha block holds around 222 trillion cubic feet (TCF) of gas, of which 46 TCF is thought to be commercially recoverable. About 70 percent of the gas is carbon dioxide, which makes the development of the gas very expensive.

 

Pertamina has several times voiced its interest to take a “more than 50 percent” stake in the block. Several companies, including French firm Total S.A., has voiced interest to team up with Pertamina to develop the gas reserve. (Bodega)