Govt looking for buyers for Natuna gas

The government is looking for potential buyers for the natural gas to be produced from the Natuna D-Alpha block in the Natuna island, that would be offered at a price of between US$15 and $16 per MMBTU.

 

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta Tuesday that a number of buyers including Qatar and South Korea had expressed interest to buy the gas from Natuna at $11 per MMBTU.

 

"We are still conducting a survey on potential buyers that could accept our offer," he said on Tuesday.

 

He said that the "well head" price and "landed" price of the gas with a CO2 content of 6 percent were initially set at $11 MMBTU.  By further reducing the CO2 content to 1 percent, and by raising the government's share from the gas production in the block, the "well head" price could be increased to $13 per MMBTU.

 

Purnomo, said that the government was also studying the possibility of building a LNG plant in nearby island in Natuna in order to reduce the delivery costs.

 

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.

 

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

 

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. (Godang)