Natuna D-Alpha project to be reevaluated<\/p>\n
JAKARTA (JP): The government along with state oil and gas
\ncompany Pertamina will reevaluate the Natuna D-Alpha project,
\nwhich has been delayed for several years due to lack of funds,
\nPertamina president Baihaki Hakim said on Monday.<\/p>\n
Baihaki said that President Abdurrahman Wahid had requested a
\nteam, comprising Pertamina, the Ministry of Mines and Energy and
\nNatuna's current project execution team, to study whether the
\nUS$40 billion project was still feasible.<\/p>\n
\"The potential is great, but we have to be realistic, as the
\nNatuna project requires huge amounts of funding. The problem lies
\nin marketing,\" Baihaki announced following a meeting with
\nPresident Abdurrahman.<\/p>\n
He said the new team would discuss the marketing prospects to
\ndetermine the feasibility of the Natuna D-Alpha project, which is
\nlocated east of the Natuna islands.<\/p>\n
\"The gas is there, but unfortunately what we evaluated three
\nto four years ago differs from what our present situation tells
\nus. That is why we need to reconsider it (the project),\" he said.<\/p>\n
He added that under the existing blueprint, the Natuna D-
\nAlpha, project also known as the East Natuna gas project,
\nincluded the development of Natuna islands as an economic center.<\/p>\n
According to him, the new team must therefore take into
\naccount the implementation of autonomy laws next year, under
\nwhich regions will receive a greater share of the proceeds from
\nthe sale of their natural resources.<\/p>\n
Unlike other gas fields, the development of Natuna D-Alpha is
\ndirectly overseen by the Agency for the Assessment and
\nApplication of Technology (BPPT), which was once led by former
\npresident B.J. Habibie.<\/p>\n
According to Habibie, the development of the Natuna gas fields
\nwould enable the Natuna islands to rival Hong Kong as a financial
\ncenter in the region.<\/p>\n
The team, Baihaki said, would also review Pertamina's
\nproduction-sharing contract with Exxon Mobil Corp., which was
\nawarded the rights to develop the massive gas project in the
\nislands in the early 1990s.<\/p>\n
The project is run by a joint venture between Exxon and
\nPertamina, in which Exxon owns a 74 percent stake and Pertamina
\nthe remaining 24 percent.<\/p>\n
Exxon has a 40 percent revenue share under the existing
\ncontract which expires in 2004.<\/p>\n
Gas production-sharing contracts normally impose a revenue
\nsplit of 70 percent for the government and 30 percent for the
\ncontractor.<\/p>\n
Baihaki said there were several options open for discussion
\nsuch as whether to terminate the contract, extend it or retender
\nit.<\/p>\n
Baihaki assured that Pertamina had no intention of revising
\nthe current revenue split of 40 percent for Exxon.<\/p>\n
He said that Natuna's high carbon dioxide content required the
\ngovernment to offer contractors incentives.<\/p>\n
Natuna is estimated to hold a total reserve of 222 trillion
\ncubic feet, of which approximately 71 percent is carbon dioxide.<\/p>\n
\"We must provide incentives, it is already difficult to market
\nthe gas now, so we must compete and look far ahead. Natuna is a
\nproject for the future,\" he said. He denied media reports that
\nclaim the state oil and gas company would cancel its contract
\nwith Exxon.<\/p>\n
The new team, he said, would also consider abolishing the
\nNatuna project execution team, which was established to develop
\nthe gas field and the Natuna region.<\/p>\n
He said Minister of Mines and Energy Susilo Bambang Yudhoyono
\nhad requested that the presence of the execution team be
\nreassessed.<\/p>\n
The current chairman of the Natuna project execution team and
\nformer president of Pertamina, Faisal Abdoe, had tendered his
\nresignation due to health reasons, Baihaki explained.<\/p>\n
The Natuna D-Alpha gas field is the largest undeveloped gas
\nreserve in Southeast Asia, containing an estimated recoverable
\nreserve of about 46 trillion cubic feet. (bkm)<\/p>",
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