Pertamina stops co-funding ExxonMobil’s Natuna project
Thursday, December 18 2003 - 07:21 AM WIB
Pertamina’s upstream director Bambang Nugroho told reporters that Pertamina had spent US$60 million to co-fund the program, but thus far the program failed to make any progress.
As such, the state firm considered it was better to stop providing funds for the program.
“Furthermore, the contract on the block will expire in 2005 if it is not developed until then,” Bambang said.
Bambang noted however that Pertamina still expected the government to extend the contract after the contract is due in 2005.
The D-Alpha project, located in the eastern part of the Natuna islands, was one of the darling projects of the former President Soeharto’s government. Soeharto was very proud of the project that he assigned then Minister of Research and Technology BJ Habibie, who later became the country’s President, to lead the project.
The D-Alpha block is believed to contain a proven reserve of 42 trillion cubic feet of gas, one of the world’s largest gas reserves. It is touted to become the main supplier of gas for Southeast Asian countries, grouped in ASEAN, which are thinking to build a gas pipeline network across the region.
The problem is that the D-Alpha’s gas contains a high carbon dioxide (CO2) content which must be separated before the gas can be sold, a process, which will drive the price of the gas beyond the price of gas from other field. The owner of the block has been studying for many years to find a technology to reduce the cost of extracting gas from the block.
The block is 76 percent owned by ExxoMobil and 24 percent by Pertamina.
Some analysts speculate that Pertamina’s move to stop co-funding the D-Alpha’s research and development program could be Pertamina’s strategy to kick ExxonMobil out of the project after the contract expires in 2005. (Alex)