Eni finds gas in Krueng Mane, wants 'incentives'
Leony Aurora, The Jakarta Post, Jakarta
A local unit of Italian oil producer Eni SpA claims to have discovered estimated gas reserves of 200 billion cubic feet (bcf) in Natuna Sea, Riau Islands, and has asked for incentives to develop the field, a government official says.
The gas reserves in the Krueng Mane field still have to be verified and certified, the deputy for planning at the Upstream Oil and Gas Executive Agency (BP Migas), Zanial Achmad, said on Thursday.
"They (Eni) have not specified what kind of incentives they want," said Zanial.
He said the company had inquired about an incentive package the government is drafting to encourage the development of marginal gas fields.
"We do not know yet if this is a marginal field," said Zanial. "They need to certify the reserves and submit a plan of development to us."
A marginal field is an area that is not economically viable to develop using common terms and splits. BP Migas has said that it plans to introduce an incentive package for such fields within the next few months.
Gas output from Krueng Mane could be used as an alternative to the supply planned from Block A in Nanggroe Aceh Darussalam for fertilizer producers in the province.
Output from the Aceh block is vital for the continued operation of fertilizer plants belonging to Pupuk Iskandar Muda (PIM) and Asean Aceh Fertilizer.
PIM's contract with ExxonMobil for gas from the nearby Arun field expired at the end of June and AAF was forced to halt production long ago because of a lack of gas.
"Production (in Krueng) may start earlier than in Block A," said Zanial.
"They will have to build pipelines to get to the mainland," he added.
The development of Block A has stalled as its operator, ConocoPhilips, works out deals with the fertilizer plants on gas prices and with the government on output splits.
The oil and gas producer is reportedly considering selling its interest in the block due to security concerns.
Conoco and ExxonMobil each own a 50 percent interest in Block A, which is estimated to have between 400 bcf and 500 bcf of gas reserves.