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T Pertamina EP Cepu, a subsidiary of state oil and gas company PT Pertamina, has officially taken over the exploration and production of natural gas at the Cepu block, which is operated by US-based ExxonMobil.

Pertamina spokesperson Mochamad Harun said on Friday that the takeover was meant to accelerate development at the Jambaran gas field and allow ExxonMobil to focus on oil exploitation at the block.

“The development of gas at the Jambaran field will be integrated with the development of the Tiung Biru field [adjacent Jambaran], which is operated by Pertamina EP, so ExxonMobil can focus on oil development,” he told reporters.

Pertamina EP, Mobil Cepu, Ampolex and PT Pertamina EP Cepu signed a head of agreement (HoA) on unifying the development of the two gas fields at the Energy and Mineral Resources Ministry in Jakarta on Friday.

By taking over gas development at the Jambaran field, Pertamina expected the development could be more efficient, particularly by cutting the involvement of expatriates in company operations.

“We estimate that the cost of development may reach US$1.2 billion, far cheaper than the earlier estimation of $2.1 billion. We hope we can start gas delivery to customers in 2015,” Harun said.

The combined proven reserves of the Jambaran and Tiung Biru fields was 1.1 trillion cubic feet (tcf), he added. Pertamina expects to produce around 200 million standard cubic feet per day (mmscfd) of gas from the two fields.

“The gas will be delivered to state electricity utility PT PLN and state fertilizer maker PT Petrokimia Gresik. We know that East Java is in need of greater gas supply,” Harun said.

The government and PT Pertamina, along with its partners — Esso Natuna (subsidiary of ExxonMobil), France-based Total E&P and Malaysia’s Petronas — also signed principles of agreement (PoA) related to the exploration and exploitation plan for the East Natuna block in Riau Islands.

Pertamina upstream operation director Muhammad Husen said that, through the agreement, the company conveyed several potential issues in exploring and exploiting the block.

“The issues are, among others, contract and fiscal matters. We hope we can sign the production sharing contract [PSC] for the block in October,” he said.

He added that the related stakeholders had not discussed details on what they were going to do at the block nor had they calculated required investments.

“However, seeing the size and the unique qualities of the block, development may involve tens of billions of dollars,” Husen said.

The East Natuna block has total proven reserves of 46 tcf, but with 71 percent of carbon dioxide it will take between six and 10 years to study how to manage the carbon dioxide waste.

Husen said Pertamina and its partners requested “special treatment” from the government in the PSC for the block. However, he would not disclose what “special treatment” the companies expected.

JP/Rangga D. Fadillah