The government has officially turned down a plan of development (POD) for gas-rich Natuna block filed by U.S. Energy giant Exxon Mobil Corp.
Concern, however, is raised whether the government’s decision will result in another tedious
battle with ExxonMobil, such as in the dispute over Cepu block, the nation’s largest oil reserve ever found.
After three years of reciting his decision to end ExxonMobil’s right in managing the Natuna D-Alpha block, Energy and Mineral Resources Minister Purnomo Yusgiantoro ended Friday once and for all speculations and debate over the block
"Upstream oil and gas regulator BPMigas has sent a formal letter of rejection of ExxonMobil in POD January 14," said Purnomo.
“Every year ExxonMobil’s submitted its working budget and program for Natuna, but we never processed them as the company’s contract (for the block) has been expired since 2005.”
In a cabinet meeting last year, the government had appointed state oil and gas company PT Pertamina to take over the block and seek bigger partner to develop it.
According to Purnomo, ExxonMobil’s contract was automatically terminated as it failed to submit a feasibility study document before the deadline on Jan 6. 2005.
“As stipulated in the contract, the contractors are required to submit feasibility study to evaluate whether the block development are economically feasible,” Purnomo said.
As reported earlier, the government’s decision not to extend the 2005 contract is also due to ExxonMobil’s failure to seriously develop the block -- an accusation strongly denied by ExxonMobil which claimed of already investing US$400 million for the block.
The government seems to have already gearing up to face possibility that ExxonMobil would bring the case before the international arbitration court to claim damages.
“Of course anybody can file arbitration, but in this case ExxonMobil has no legal basis to do so. The deadline was not fulfilled so the contract was terminated automatically,” BPMigas’s head of legal division Alan Frederik said.
ExxonMobil’s spokesman Maman Budiman said the company was “respectfully disagree with the government”.
“We remain interested in a resolution which allows development of this resource to proceed with the support from the government,” he said.
“ExxonMobil is uniquely positioned to develop this project efficiently in partnership with Pertamina.” Despite an assurance from Purnomo, Pertamina has repeatedly complained it faced difficulties to access the block’s exploration data.
Purnomo, however, insisted the government had the data, and it was a state document.
“All contractors must give the data to the government otherwise they can be criminalized with maximum punishment of one year jail term and maximum fine Rp 10 billion,” he said.
BPMigas chairman Raden Priyono blamed Pertamina’s lack of data management for not having the Natuna data.
“As a partner, Pertamina is suppossed to have the data. I think the problem is with Pertamina’s data management”
Located in Riau Islands, the Natuna D-Alpha block is estimated to contain 46 trillion cubic feet of gas, making it the bigest reserve in Asia. However, the block has a high-degree of CO2, making it difficult for exploration unless it is handled by energy companies with advance technology.
Purnomo insisted Pertamina, having 40 percent interest in Natuna, to proceed with selecting partners to develop the block
Concern, however, is raised whether the government’s decision will result in another tedious
battle with ExxonMobil, such as in the dispute over Cepu block, the nation’s largest oil reserve ever found.
After three years of reciting his decision to end ExxonMobil’s right in managing the Natuna D-Alpha block, Energy and Mineral Resources Minister Purnomo Yusgiantoro ended Friday once and for all speculations and debate over the block
"Upstream oil and gas regulator BPMigas has sent a formal letter of rejection of ExxonMobil in POD January 14," said Purnomo.
“Every year ExxonMobil’s submitted its working budget and program for Natuna, but we never processed them as the company’s contract (for the block) has been expired since 2005.”
In a cabinet meeting last year, the government had appointed state oil and gas company PT Pertamina to take over the block and seek bigger partner to develop it.
According to Purnomo, ExxonMobil’s contract was automatically terminated as it failed to submit a feasibility study document before the deadline on Jan 6. 2005.
“As stipulated in the contract, the contractors are required to submit feasibility study to evaluate whether the block development are economically feasible,” Purnomo said.
As reported earlier, the government’s decision not to extend the 2005 contract is also due to ExxonMobil’s failure to seriously develop the block -- an accusation strongly denied by ExxonMobil which claimed of already investing US$400 million for the block.
The government seems to have already gearing up to face possibility that ExxonMobil would bring the case before the international arbitration court to claim damages.
“Of course anybody can file arbitration, but in this case ExxonMobil has no legal basis to do so. The deadline was not fulfilled so the contract was terminated automatically,” BPMigas’s head of legal division Alan Frederik said.
ExxonMobil’s spokesman Maman Budiman said the company was “respectfully disagree with the government”.
“We remain interested in a resolution which allows development of this resource to proceed with the support from the government,” he said.
“ExxonMobil is uniquely positioned to develop this project efficiently in partnership with Pertamina.” Despite an assurance from Purnomo, Pertamina has repeatedly complained it faced difficulties to access the block’s exploration data.
Purnomo, however, insisted the government had the data, and it was a state document.
“All contractors must give the data to the government otherwise they can be criminalized with maximum punishment of one year jail term and maximum fine Rp 10 billion,” he said.
BPMigas chairman Raden Priyono blamed Pertamina’s lack of data management for not having the Natuna data.
“As a partner, Pertamina is suppossed to have the data. I think the problem is with Pertamina’s data management”
Located in Riau Islands, the Natuna D-Alpha block is estimated to contain 46 trillion cubic feet of gas, making it the bigest reserve in Asia. However, the block has a high-degree of CO2, making it difficult for exploration unless it is handled by energy companies with advance technology.
Purnomo insisted Pertamina, having 40 percent interest in Natuna, to proceed with selecting partners to develop the block
Source: Alfian , THE JAKARTA POST , JAKARTA | Sat, 01/17/2009 11:51 AM | Business
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