Pertamina expects to sign Natuna JOA with partners by year-end

State oil and gas company PT Pertamina said it expects to sign a Joint Operation Agreement (JOA) over the development of the major East Natuna block with its partners, ExxonMobil, Total Indonesie and Malaysia?s Petronas at the end of this year.

Once the JOA is signed, Pertamina hopes to immediately sign the production sharing contract (PSC) for the development of the block with the government.

?We are hoping to sign the JOA and PSC agreement so that we can develop the block. There are pending issues that need to be resolved. We hope we can sign the JOA in December,? Director for Upstream of Pertamina, M. Husein, told Petromindo.com.

He however did not disclose what the pending issues were. Earlier, Pertamina said it is seeking for incentives from the government to develop the block given high level of carbon dioxide element found in the block.

The operator of the block will require advanced and thus more expensive technology to omit the carbon dioxide. As a result, out of 200 trillion cubic feet gas reserves at the block, only 45 trillion cubic feet would be able to be produced. Therefore, the contractors of the block want better incentives compared to other gas blocks.

The PSC contract for the block, previously known as the Natuna D-Alpha, should have been signed by October 28, 2011.

Pertamina has estimated that the development of the gas-rich East Natuna block will cost between US$20 billion and $40 billion due to high carbon dioxide content. (godang)