Govt tells ExxonMobil to ?check out? as Natuna contract expires

The government has told American oil and gas company ExxonMobil to quit the Natuna D-Alpha block in Natuna Sea as the firm?s contract has expired without any signs indicating the firm would develop the block?s gas reserves.

?We have given the firm until Jan. 8, 2007 to check out (of the block),? Minister of Energy and Mineral Resources Purnomo Yusgiantoro said during a breaking of the fast gathering on Tuesday.

Purnomo said the firm?s contract expired in 2005 and thus far the firm had yet to prove its commitment to develop the block?s natural gas resources.

According to Purnomo, he had told ExxonMobil?s leaders about the end of the company?s contract during a recent visit to the United States to accompany Vice President Yusuf Kalla.

ExxonMobil?s leaders, Purnomo said, insisted that the firm?s contract was still valid until 2009, citing that that it had given the right to extend its exploration permits until 2009. However, Purnomo said, the opinion was in conflict with that of oil and gas upstream authority BP Migas, which insisted the extension of exploration permit could not be used as a reason to extend its contract.

?With regards commerciality, it must be clear who the buyers are. How?s about the feasibility study? For BP Migas, it?s clear that the contract has expired,? Purnomo said.

Purnomo also said the government is studying the possibility of state oil and gas company PT Pertamina being given priority to develop the block.

?As a matter of fact, the contract does not have the so-called first right refusal. The government can give a privilege to Pertamina. But, whether the government will do that, it is still in the process of studying,? Purnomo said.

Meanwhile Pertamina?s president Ari Soemarno said Pertamina still wanted to remain in the block as it had put some investment there.

According to him, ExxonMobil has invested US$250 million in the explorations of the block, 24 percent of which or $60 million contributed by Pertamina.

?We ask the government, if there is a new policy on the block, that Pertamina will not be asked to leave. Thus, Pertamina will have the chance to regain its investment,? Ari said.

ExxonMobil signed an exploration contract with the government to drill the Natuna D- Alpha block more than two decades ago. Based on explorations, the field is believed to contain about 46 trillion cubic feet of natural gas. But, the development of the field has been hampered as the gas contains more than 70 percent of carbon dioxide, making it expensive to extract. (Godang)