No East Natuna development without incentives: Pertamina

By Godang Sitompul

PT Pertamina repeated on Thursday calls on the government to provide incentives for the development of East Natuna block, saying the incentives are necessary in view of the high costs of the project.

?We need the incentives,? Hari Karyuliarto, Gas Director at the state owned oil and gas firm, said on the sidelines of the Indonesian Petroleum Association (IPA) conference.

The request for incentives has been several times expressed by the state firm over the past several years, but the government seems to still turn deaf ears to the request for unclear reasons. Pertamina has thus far refused to disclose to the press the kind of incentives it is looking for.

Rudi Rubiandini, Operational Control Deputy at upstream authority BPMIGAS, confirmed that the firm had officially asked for incentives for the development of the project.

?They (Pertamina and its partners) will not develop the project unless the government, particularly the Ministry of Finance, meets their incentive requests,? Rudi said.

The East Natuna block in South China Sea is believed to hold 46 trillion cubic feet (tcf) of natural gas, one of the biggest untapped gas reserves in Asia. The gas reserve however has significant CO2 contents. The costs of the project are projected to be unusually high because Pertamina and partners will have to clean the gas of the CO2 elements.

In December 2010, Pertamina signed agreements with Exxon Mobil, Total and Petronas as partners to develop the Natuna gas field. The project is expected to cost Pertamina and its partners between US$20 billion to $40 billion, depending on the gas delivery and production methods.

Petronas resigned from the project early this year.

Editing by Johannes Simbolon