Pertamina may sign contract to develop Natuna gas block this year

State oil and gas firm PT Pertamina is expected to sign a contract with the governnment this year to develop Natuna D-Alpha gas block in Natuna Sea as an operator and owner of an about 40 percent stake, a senior official of oil and gas upstream regulator BPMIGAS said on Tuesday.

?The most important thing is that Pertamina will become the majority shareholder. It will probably partner with one, two or three companies," BPMIGAS' vice chairman Abdul Muin told reporters after meeting with Pertamina.

To become a Pertamina partner in the block, he said, a company must have technology, financial capabilities plus a strong research and development ability given the gas' high CO2 content.

"It take 10 years to develop the block. It is expected to come onstream around 2018," Muin said.

A number of potential buyers including those from China and Japan have expressed interest to buy gas from the block, Minister of Energy and Mineral Resources Purnomo Yusgiantoro has said.

"While waiting for Pertamina to complete a proposal to develop the block, we have been approaching potential buyers and it turned out Indonesian traditional buyers in Japan and China have expressed interest,? Purnomo told reporters last month.

Buyers in Malaysia, Vietnam and Thailand have also reportedly expressed interest to buy gas from the block.

The government has decided to terminate ExxonMobil?s contract on the block and hand it over to Pertamina, claiming that the American firm had failed to develop the block and its contract had expired. Pertamina, however, is required to submit proposal on how to develop the block. The proposal should be presented to President Susilo Bambang Yudhoyono.

Pertamina's Deputy CEO Iin Arifin Takhyan said in early March that Pertamina will soon conduct beauty contest to find partner(s) to develop the block. A number of companies including Royal Dutch/Shell, Petronas, StatOil, Total EP have voiced interest to become a partner.

Pertamina estimated US$40 billion of investment is needed to develop develop block.

The block has around 222 trillion cubic feet (TCF) of gas, of which about 46 TCF is thought to be commercially recoverable. (godang)