Pertamina to take over Natuna gas field
Friday, February 8 2008 - 12:45 AM WIB
Vice President Jusuf Kalla said on Thursday that the decision was made following a deadlock in negotiations between the government and ExxonMobil on the extension of the contract to develop the block.
The government ended the negotiations because, among others, it thought the production share offered by the American firm was too small.
The decision to transfer the block to Pertamina is in line with the existing regulations that give Pertamina priority to take over any block should the contract with private developers be terminated, according to Jusuf.
He said Pertamina was permitted to seek partners in developing the gas block, which is estimated to hold 46 trillion cubic feet of recoverable gas.
Pertamina's President Director Ari Soemarno confirmed that Pertamina has been granted the right to take over the block, and that the company is now waiting for an official letter from the government.
?We will wait to see what the government will offer in the new contract as it will definitely involve a change in production split,? he said.
Earlier, Ari said Pertamina would seek new partners to develop the block because it is now estimated to require an investment of $52 billion, far higher than the initial estimate of $25 billion.
ExxonMobil and the government were involved in negotiation on Natuna block after the government claimed that ExxonMobil?s rights were terminated in 2005 and the firm had failed to show any progress in developing the field. ExxonMobil denied the claim, saying it had spent approximately $400 million for exploration of the field, which gave it the right to an extension until 2009.
The Natuna D-Alpha block has around 222 trillion cubic feet (tcf) of gas reserves, of which about 46 tcf is thought to be commercially recoverable
ExxonMobil controls a 76 percent stake in the Natuna block while Pertamina, owns 24 percent. (godang)