Pertamina evaluates Exxon?s offering price for JTB project

By Febry Silaban

Petromindo|Boim

State-owned oil and gas firm PT Pertamina said it is still evaluating the asking price of US$121 million for ExxonMobil Cepu Ltd?s (EMCL) interest in the Jambaran Tiung Biru (JTB) gas project.

?Exxon had asked for $121 for the 40 percent (stake) in the JTB project. We?re currently evaluating the offer,? said Pertamina Upstream Director Syamsu Alam on Friday.

Deputy Minister of Energy and Mineral Resources said in early August that ExxonMobil Cepu Limited is pulling out from the JTB project in Central Java due to disagreement over the selling price of gas from the project.

Arcandra said that ExxonMobil has reached agreement with PT Pertamina over the transfer of the former company?s interest in the JTB field to the latter. He did not provide details of the agreement including on the selling price of the ExxonMobil shares in JTB.

ExxonMobil Cepu Limited owns a 41.4 percent interest in the JTB project. Meanwhile, Pertamina through Pertamina EP Cepu owned 41.4 percent and through Pertamina EP owned 8 percent, with the remaining 9.2 percent participating interest held by company owned by local administrations.

With the transfer of ExxonMobil?s interest, Pertamina becomes the majority owner with about 90 percent shares in the JBT project. (*)

Pertamina on August 8 signed a heads of agreement (HOA) with state-owned oil and gas firm PT PLN to supply gas from the JTB project at a price of US$7.6 per mmbtu. The HOA is expected to be followed up with the binding gas sales and purchase agreement, hopefully within a month, which will pave the way for Pertamina to start construction of the JTB project, targeted to start gas production in 2020.

The gas selling price agreement comes following lengthy negotiation process between Pertamina and PLN. Pertamina initially demanded for a gas price of more than $8 per mmbtu to make the JTB project economically feasible. But PLN has demanded for a lower price of $7 per mmbtu.

Meanwhile, to allow for a lower gas selling price, Arcandra said that the ministry has asked Pertamina to bolster efficiency and cut down capital expenditure plan for the JBT project to $1.55 billion from the initial projection of $2.1 billion as set under the plan of development.

Editing by Reiner Simanjuntak