|
The government has set up a team to negotiate a new
production sharing contract with ExxonMobil Corp. for the development
of the Natuna D-Alpha gas block in the Natuna Sea.
Although the government has yet to formally announce whether ExxonMobil
will be allowed to continue to operate the gas block, the setting up of
the team signals that the American oil giant will likely be reappointed.
The Energy and Mineral Resources Ministry's director for the upstream
oil and gas industry, Priyono, said Friday that the team had been set
up last week and was expected to be able to complete its work by June.
"It is officially called the Natuna Block Management Committee and is
chaired by Pak Kardaya Warnika (the Upstream Oil and Gas Executive
Agency/BP Migas chairman)," Priyono said.
Kardaya said earlier that given current high oil prices, the new
contract should offer more favorable terms for the government,
especially regarding the percentages under the production split.
Under the old contract, the production split between Exxon and the
government was 100 percent to zero in favor of Exxon, as compared to 35
percent to 65 percent in favor of the government in other gas fields.
The new team has been established after prolonged negotiations between
the government and Exxon on the renewal of the old contract failed to
produce a consensus.
Last year, the government refused to renew Exxon's contract to develop
the gas field due to the slow progress being made. Exxon objected to
this decision, saying that it had spent about US$400 million on
exploration work.
Exxon also based its argument on amendments that were made to the
contract in 1995, saying that due to the technical difficulties faced
by Exxon in developing the high-cost gas field, the government would
extend the contract until 2005 so as to allow the field to be brought
onstream -- five years longer than under the original contract -- and
allow Exxon to extend the contract twice, for a period of two years
each time.
Exxon and its partner, state oil and gas firm Pertamina, secured a
20-year production sharing contract for the Natuna block in 1980, with
participating interests of 76 percent for Exxon and 24 percent for
Pertamina.
However, the government insisted on not renewing Exxon's contract in
2005 as, under the 1995 agreement, the contract would only be extended
if the company had made "significant progress" in developing the block.
The dispute over the renewal of the contract left the government with
three options for the future of the gas block -- retendering the
contract, giving the exploration rights to state-owned oil firm PT
Pertamina, which had already spent $60 million on exploration work, or
renegotiating the deal with Exxon.
When contacted by phone, Exxon public affairs vice president Maman
Budiman refused to comment on the setting up of the negotiating team,
saying that nothing had been finalized to date.
|
