Pertamina Wants to Double Stake in Natuna Block
Indonesia's PT Pertamina (PTM.YY) is seeking to double its stake in the Natuna D-Alpha block to 50% as the government is set to renegotiate the whole contact with Exxon Mobil Corp. (XOM), which controls a 76% stake, a Pertamina official said Thursday.
"We don't have any problem in financing (the development of the D-Alpha block) as the block is economical," Ari Sumarno, president director of the state-owned oil and gas company told reporters.
Pertamina currently holds a 24% stake in the gas block, lying in the East Natuna Sea, which is estimated to contain 46 trillion cubic feet of recoverable gas reserves.
The government declared unilaterally late last year that the contract on the block expired in 2005, saying Exxon Mobil failed to develop it over the past 20 years.
Exxon Mobil argued that the current contract remains valid until January 2009, but has said it is willing to renegotiate the contract.
The government is demanding that several contents of the contract be revised, including the production sharing split and Pertamina's stake if Exxon Mobil wants to keep the block.
Under the current contract, the contractor gets 100% of the revenues from the block, due to the high C02 content of the D-Alpha block gas reserve, which makes it difficult to sell.
Exxon said that more than 50% of the block revenues would go to the state coffers in the form of various taxes.
The Natuna spat has unsettling echoes of the lengthy disagreement between Exxon Mobil and Pertamina over a joint operating contract to tap the massive Cepu block in East Java. Prior to its resolution in March 2006, the dispute had become a symbol among foreign investors and analysts of the perils of contract enforcement in Indonesia.
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