Pertamina seeks new partner to develop East Natuna

State oil company Pertamina is seeking a new partner to develop the East Natuna gas block in Natuna, Riau Islands to replace Malaysian company Petrogas Carigali, which recently decided to withdrew from the project.

Pertamina?s President Director Karen Agustiawan said in Jakarta on Monday that the Malaysian company?s withdrawal opened an opportunity for other companies to take part in the development of the East Natuna gas project.

But she said that Pertamina would prefer to cooprerate with a national company to jointly develop the gas block. Karen said that Petronas pulled out from the project was due to the company?s business consideration. ?It was not because Petronas did not feel comfortable with our partnership arrangement,? she was quoted by Investor Daily as saying.

In August 19, 2011, Pertamina and its partners Petronas, Esso Natuna Ltd and Total E&P Activities Petrolieres signed Principles of Agreement (PoA) on the development of the East Natuna. The POA is an initial agreement which will be used as the basis for the issuance of a production sharing contract (PSC) by the government.

Karen said that Petronas? withdrawal would not affect the existing development plan of the East Natuna block because the existing partners would still be able to bear all the costs for the project.

The Energy and Mineral Resources Ministry is still formulating incentives which could be given to Pertamina and partners to develop the East Natuna gas block. The costs for the development of the block is estimated to reach US$40 billion or more, depending on what kinds of transportation facilities for gas delivery. The construcion of a pipeline to connect the block to Sumatra island is estimated to reach $20 million. The construction cost for an LNG plant will be higher. (*)