East Natuna's D-Alpha closer to development
The Jakarta Post, Jakarta
State-owned oil and gas company Pertamina and its Malaysian counterpart, Petronas signed a preliminary deal for the supply of gas that may end uncertainty over the development of the D-Alpha gas field in East Natuna.
The deal could pave the way for the supply of 10 billion cubic feet of gas per day (bcfd) over a 20 year period starting in 2010, said Pertamina upstream director Iin Arifin Takhyan.
He said Pertamina and its production-sharing partner Esso Natuna Limited, a unit of American oil and gas company ExxonMobil Corp., signed the Memorandum of Understanding with Petronas last week in Kuala Lumpur.
Studies toward finalizing a gas sales contract were underway, he added.
"We will start carrying out a feasibility study in April that will continue until the end of this year," Iin told the Jakarta Post last week.
He added, however, that it was too early to say how much revenue Pertamina could expect from a gas contract on D-Alpha.
Located about 1,250 kilometers north of Jakarta at a depth of 145 meters below sea level, the gas fields development have long been delayed because of the high cost of investing in it.
East Natuna's D-Alpha field is estimated to hold total reserves of 140 trillion of cubic feet (tcf), of which some 72 percent contain carbon dioxide.
The gas reserve itself may reach some 45 tcf, which a Pertamina official said was feasible enough.
But separating the carbon dioxide from the gas will inflate D- Alpha's development costs to some $40 billion -- one reason why Pertamina has said it wanted a long-term buyer.
Talks with Petronas on a gas sales contract began early last year, albeit slowly, as demand for D-Alpha's gas in Malaysia is expected to only start coming in by 2010.
Right now, Pertamina and Petronas are already engaged in talks over supplying gas from West Natuna's gas fields operated by British-based Premier Oil.
The East Natuna D-Alpha block is 76 percent owned by Esso Natuna Ltd and Mobil Natuna D-Alpha Inc., and 24 percent by Pertamina under a production-sharing contract.