Govt mulls incentives for Block A gas field in Aceh
Friday, August 27 2004 - 02:29 AM WIB
"The President asked to further study the proposed incentive for the development of the gas field so that if the special incentive is given, it will not cause a financial loss to the government," Minister of Energy and Mineral Resources Purnomo Yusgiantoro told reporters in Jakarta on Thursday.
Purnomo said that the development of the Block A gas field would be able to cope with the shortage of gas supply in Aceh. Two fertilizer plants PT Pupuk Iskandar Muda and PT Asean Fertilizer Plant in Aceh have suffered a shortage of gas supply due to the decline in the gas production at the existing Arun field. The production of this field is only enough to meet the export commitment of the Arun LNG plant.
ConocoPhillips and ExxonMobil have asked the government to get a production share of 50 percent from the gas field. The proposed production split is much higher than between 30 percent and 35 percent given to the existing gas producers.
The two American energy companies demanded a higher production share to compensate the higher production cost they have to pay for the development of the gas field, which is said to have a high sulfur content.
Purnomo said that if the government agreed to provide the special incentives, the gas field was expected to be able to start production in 2008. "It means than from 2005 to 2007 we have to supply gas from gas fields in Bontang, East Kalimantan to cope with the shortage of gas in Aceh," he said. (*)