[Kabar-indonesia] Indonesia sees Exxon Natuna talks concluded in Jan

[Joyo3]

Indonesia sees Exxon Natuna talks concluded in Jan

JAKARTA, Nov 16 (Reuters) - Indonesian oil watchdog BPMIGAS
said on Thursday talks with Exxon Mobil Corp on operating
rights for the Natuna D-Alpha gas block are expected to be
completed in January.

The Indonesian government terminated the contract held by
Exxon to operate the huge Natuna D-Alpha gas block last
month, amid high extraction costs and a lack of buyers for
the gas.

Exxon Mobil has disputed the termination and said the
contract allows for two more years for it and Indonesian
state energy firm Pertamina to satisfy conditions or proceed
with development even if the terms for development of the
field are not met by Jan. 8, 2007.

"Indonesia is ready to negotiate with Exxon on Natuna D-
alpha block. If we are talking about the terms and
conditions, then it won't be too long ... It will at least
take about three months," said the head of BPMIGAS, Kardaya
Warnika.

"Hopefully it could be completed in January and we want the
best terms and conditions for the country."

Pertamina has a 24 percent stake in the Natuna D-alpha
block, while Exxon has 76 percent.

"We would like to hear what the (Indonesian) government
wants, but what we want is a mutually beneficial (agreement)
for both parties," said Maman Budiman, Exxon Mobil Indonesia
senior vice-president.

The Natuna D-Alpha block contains around 222 trillion cubic
feet (tcf) of gas, of which 46 tcf is thought to be
commercially recoverable, but the field contains about 70
percent carbon dioxide, making it expensive to develop and
difficult to sell.

Despite the difficulties developing the field, the move to
end Exxon's contract may cause concern among foreign
investors about uncertainties of doing business in
Indonesia, compounding worries over the legal system, labour
and corruption.

Indonesia and Exxon Mobil signed a basic agreement in 1995
covering an estimated $40 billion to be invested in the
offshore gas project in the South China Sea.

However, tapping the reserves has proved difficult.

The gas in Natuna D-Alpha, about 1,100 km (680 miles) north
of capital Jakarta and 200 km east of the West Natuna fields
that are currently feeding gas to Singapore, accounts for
about a quarter of Indonesia's total gas reserves of 182
tcf.

Asia Pacific's sole OPEC member has far more gas than oil,
and is trying to phase out costly oil-fired power generation
and uses more of its cheaper, cleaner natural gas
domestically.

But the country faces limited supplies due to long-term LNG
export commitments, which it is reviewing.



------------------------------------------
Joyo Indonesia News Service
------------------------------------------