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Uncertainty over Natuna looms as ExxonMobil fights back
While the contract of U
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While the contract of U.S. energy kingpin ExxonMobil Corp. in managing the gas-rich Natuna D-Alpha block expires Friday, legal uncertainty over the concession is growing with the company claiming an extension to the contract.
ExxonMobil Indonesia spokesman Maman Budiman said the company's production sharing contract (PSC) to develop the block would remain active as it had submitted plans of development (POD) for Natuna as a token of an extension to the contract.
"We have submitted our POD for the block to the government on Dec. 30, meaning that we are not late,"
"The POD submission is one step for the block development, and we have followed this step as stipulated in the contract's terms and conditions. Therefore, our PSC remains in full force and is fully effective," Maman said Thursday.
Evita H. Legowo, director general for oil and gas at the Energy and Mineral Resources Ministry refused to comment about the status of ExxonMobil in the block, saying merely she would go through the POD before deciding upon any measures.
Located in the Riau Island province, the Natuna D-Alpha block is estimated to hold 46 trillion cubic feet of gas, making it one of the biggest reserves in Asia.
Previously, ExxonMobil held a 74 percent participating interest in the block, while state owned oil and gas company PT Pertamina owned the remaining 26 percent.
However, the government revoked ExxonMobil's rights in 2005 after the company was deemed to have failed to make sufficient progress in developing the block. ExxonMobil has repeatedly denied the claim, saying its rights in the block still remained after spending around US$400 million on exploration.
The government, in a Cabinet meeting decision, ordered Pertamina to develop the block and to seek partners because the investment for the project would need at least $52 billion.
After this decision, Pertamina now has a 40 percent interest in Natuna, with the remainder to be allocated to partners. Pertamina has shortlisted eight prospective companies for potential partnership.
Despite claiming that its Natuna PSC contract remains active, ExxonMobil is also listed among the eight to participate in the new selection process.
ExxonMobil spokesman Maman refused to comment on this matter.
Others potential partners include Royal Dutch Shell Plc, Chevron Corp, Eni SpA, Total SA, StatoilHydro ASA, China National Petroleum Corp, and Malaysia's Petronas.
Pertamina said earlier it would announce the selected partners by January. But it later decided to delay the selection.
Pertamina argued it would not continue the selection until it received the government's confirmation about the status of ExxonMobil in relation to the block, Pertamina's upstream director Karen Agustiawan said on Dec 22.
Karen said that given the unclear status of ExxonMobil, Pertamina would face some difficulties, including difficulties in accessing the required data about the block and other legal issues.
The Natuna legal limbo is ExxonMobil's second dispute with the government and Pertamina. The first one was in 2004 revolving around the management of the oil-rich Cepu block, located on the border of East Java and Central Java.
