State-owned oil and gas firm PT Pertamina says it is still selecting more partners to develop the East Natuna gas block in Riau Islands province, in addition to US-based ExxonMobil, which signed an agreement in Jakarta on Friday to be part of the team.
Pertamina and ExxonMobil signed a head of agreement witnessed by Energy and Mineral Resources Minister Darwin Zahedy Saleh in Jakarta to formalize their bond before entering into further negotiations on exploration of the block.
“Pertamina still has to select several other partners based on the ongoing short-listing process,” said Darwin after the signing ceremony.
Earlier reports said eight companies had been short-listed as potential partners for Pertamina to develop the East Natuna block.
They were ExxonMobil, Statoil (Norway), Chevron (the United States), Total E&P (France), Shell (Netherlands), Petronas (Malaysia), China National Petroleum Company, and ENI (Italy).
The East Natuna block, previously known as the Natuna D Alpha block, is estimated to have a total deposit of 500 million barrels of oil and 222 trillion cubic feet (tcf) of gas, the largest gas deposit ever found in the world. From more than 200 tcf estimated gas deposit, only 46 trillion tcf can be explored due to the site’s high carbon dioxide content.
Darwin said the government ensured that gas from the block would be used to meet domestic demand. He added that the selling price of the gas would follow the international market to accommodate investors’ interests to make a profit.
Pertamina spokesman Mohammad Harun said his company had several requirements in selecting partners to explore the block and ExxonMobil could fulfill the requirements earlier than other potential partners.
“We have several requirements for all potential partners. If they can fulfill the requirements, we can sign the head of agreement as soon as possible,” he said, adding that the other short-listed companies were now in the process of meeting those requirements.
The vice president for Asia Pacific and Middle East of ExxonMobil, Mike Cousins, told reporters that he was very pleased with the signing of the agreement. He called the signing “a progress to support the resource commercialization of the East Natuna block”.
“We have been waiting for the negotiation. We’ve cooperated with Pertamina and the government to explore the world-class resource block,” he said.
He went on to say that the value of project as well as other detailed terms and conditions would be discussed within six months of the signing of the head of agreement.
The ministry’s director general for oil and gas, Evita Herawati Legowo, said that ExxonMobil still had to discuss commercial terms and conditions on the block’s exploration with Pertamina before negotiating with the government.
For other partners, she hoped that Pertamina could sign head of agreements with all selected partners next week. “But, it depends on the ongoing short-listing process. Pertamina is now working on the selection process and we hope we can sign other agreements next week.”
The government has given a mandate to Pertamina to explore the block since 2008. Previously, ExxonMobil won a contract to develop the block in 1980, but since it failed to produce gas, the government canceled the contract in 2005.