Govt urges ExxonMobil to apply for D Alpha contract extension

The government is warning US oil giant ExxonMobil Corp. to immediately request for a contract extension at its giant gas block offshore Natuna or risk losing the contract, a senior government official said.

“I don’t know what keeps ExxonMobil from extending the contract. They should have (apply for contract extension) by now. If they are not interested with the block any more, they should give it back to the government so that we can find other interested parties,” said Director General of Oil and gas at The Ministry of Energy and Mineral Resources Iin Arifin Takhyan over the weekend.

Iin said that ExxonMobil’s commitment was needed in order to decide for the future development of the Natuna D Alpha block, which has proven reserves of more than 40 TCF of recoverable gas.

A PSC contract was normally extendable for 20 years and should be applied three years prior to contract completion date.

ExxonMobil Oil Indonesia officials were unreachable for comment.

ExxonMobil signed the PSC contract on D Alpha block in 1980 for 30 years until 2010. However, the contract would end in 2005 if the block is not developed.

ExxonMobil had been scrambling to find market for its gas reserves, which would need a minimum volume of 1 BCFD in order to make the project economic due to its high CO2 content.

ExxonMobil had been studying possibility to pipe the gas to Malaysia, Java, Thailand, even to China. But thus far it had failed to clinch a single gas sales contract. The block was initially projected to be major supplier for ASEAN pipeline grid.

ExxonMobil has 76 percent interest in D Alpha block, with state oil and gas compant PT. Pertamina holds the remaining balance. (godang)