Special team formed to negotiate new PSC for Natuna gas block

The government has set up a team to negotiate a new production sharing contract with US oil giant ExxonMobil Corp. for the development of the Natuna D-Alpha gas block in the Natuna Sea.

 

The Energy and Mineral Resources Ministry’s director for the upstream oil and gas industry, R. Priyono said Friday that the team, which had been set up last week,  was expected to complete their work in three months.

 

“It is officially called the Natuna Block Management Committee and is chaired by Pak Kardaya Warnika (upstream oil and gas regulator BPMIGAS' chairman),” Priyono said.

 

Earlier, Kardaya said that talks with ExxonMobil on operating rights for the Natuna D-Alpha gas block is expected to be completed in January.

 

In October last year, the Indonesian government announced that Exxon's legal right to develop Natuna had expired or been terminated.

 

Exxon has insisted that it retains the contractual right to continue development until 2009 of the block, which the firm estimates holds 46 trillion cubic feet of recoverable natural gas reserves. Exxon later agreed to renegotiate the contract with the government

 

The Natuna D-Alpha block holds around 222 trillion cubic feet (TCF) of gas, of which 46 TCF is thought to be commercially recoverable. About 70 percent of the gas is carbon dioxide, which makes the develpment of the gas very expensive . Pertamina has a 24 percent stake in the Natuna D-alpha block, while Exxon has  76 percent. (*)