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Govt undecided over ExxonMobil status in Natuna
The government remains undecided over the contract extension of energy kingpin ExxonMobil Corp
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The government remains undecided over the contract extension of energy kingpin ExxonMobil Corp. in developing the gas-rich Natuna D-Alpha block, with state oil and gas company PT Pertamina voicing its interest to partner with the U.S. company.
ExxonMobil's contract to develop the block, Asia's biggest gas reserve site, expired Friday, but the company insisted its contract remained valid after submitting to the government plans of development (POD) late last year for developing the block.
While refusing to provide any reason behind the uncertainty regarding the contract extension, the Energy and Mineral Resources Ministry said it could not make any immediate decision to resolve the problem.
"Not yet," Evita H. Legowo, the ministry's director general for oil and gas said Friday when asked whether the government had made up its mind over the issue and over the POD assessment submitted by ExxonMobil.
The government's stance, which is likely to be decided by President Susilo Bambang Yudhoyono as it is considered sensitive to relations between Indonesia and the United States, leaves Pertamina in limbo until a decision is made.
The government, in a Cabinet meeting decision last year, ordered Pertamina to take over the development of the block and to seek partners because the required investment for the block would need at least $52 billion.
Pertamina president director Ari H. Soemarno said the company was waiting for the terms and conditions from the government in relation to the development of the block, in order to help gauge the economic value of the proposed development.
Until now, Pertamina is unable to access enough data about the block, even though this should be in the hands of government.
Pertamina has repeatedly questioned the government about the status of ExxonMobil in relation to the block, hindering its efforts to tap the much-needed gas reserves, below the territory of the Riau Islands province, currently estimated at about 46 trillion cubic feet.
The block, however, contains high levels of CO2, making it more difficult to exploit and forcing Pertamina to invite other giant oil companies to potentially become partners.
Ari said Pertamina would not hesitate to work with ExxonMobil in developing the block.
"We are open to partner with ExxonMobil. They are now included in the eight short listed potential partners," Ari said.
Pertamina has earlier delayed selecting the partners.
The company now has a 40 percent interest in Natuna, with the remainder to be allocated to partners.
Before the contract dispute erupted, ExxonMobil held a 74 percent participating interest in the block, while Pertamina owned the remaining 26 percent.
Speculation is rife that the government's reluctance to decide over the status of ExxonMobil in Natuna is due to the trauma of potentially repeating a lengthy battle with ExxonMobil over the operating rights for the oil-rich Cepu block, which took four years for the government to settle.
A termination of the ExxonMobil contract would also risk the government being brought before an international arbitration court, which could cost the government more money as well as protracted legal efforts.
In 2001, the government and Pertamina engaged in a dispute with ExxonMobil over Cepu, which was settled in 2005 by eventually allowing ExxonMobil to act as the controller of the block but having an equal share with Pertamina.
Located in the border of Central Java and East Java, the Cepu block is estimated to hold 500 million barrels of oil reserves, making it Indonesia's largest single source of oil.
