Negotiations over Natuna gas field stalled again

The negotiations between the government and ExxonMobil Oil Indonesia over the extension of the American company's contracts to operate the Natuna D-Alpha gas field in the Natuna Sea have been stalled again.

Kardaya Warnika, the head of BPMIGAS, the regulatory body for oil and gas upstream operations, said in Jakarta Monday that the negotiations deadlocked again as both failed to agree on a number of crucial points.

He, however, refused to elaborate, saying that as a member of the government team in the negotiations he was not allowed to disclose the details of the negotiations to the press.

Minister of Energy and Natural Resources Purnomo Yusgiantoro said that earlier that both the government and ExxonMobil had failed to agree on nine crucial points being negotiated including the price reference of gas and tax calculation.

In October last year, Purnomo insisted that the government would stick to its gun to get 60-65 percent split in Natuna D Alpha. ?If ExxonMobil refuses, or negotiation fails, government might give the block to Pertamina, which in turn might find suitable partner(s) to develop the block,? he said.

A number of buyers from Malaysia, Vietnam and Thailand have expressed interest to buy gas from the Natuna gas field.

Purnomo did not disclose the split that ExxonMobil has proposed, but the firm was given a 100 percent split in its previous contract in the block, meaning that Exxon only has to pay income tax.

ExxonMobil controls a 76 percent stake in the Natuna block while Indonesian state oil and gas firm, Pertamina, owns 24 percent.

ExxonMobil and the Government of Indonesia are involved in negotiation on Natuna block after Indonesia said the firm?s contract on the block had expired, whereas the firm has said the contract is valid until 2009.

The Natuna D-Alpha block has around 222 trillion cubic feet (tcf) of gas reserves, of which about 46 tcf is thought to be commercially recoverable. (godang)