ExxonMobil to farm out share in Block A
ExxonMobil to farm out share in Block A
Leony Aurora, The Jakarta Post, Jakarta
U.S. energy giant ExxonMobil will announce the winner of a tender
to farm out its 50 percent share in Block A in Nanggroe Aceh
Darussalam in the first quarter of next year, a government
official says.
Exxon has closed the data room for companies interested in
bidding for the block, chairman of the Upstream Oil and Gas
Regulatory Agency (BP Migas) Kardaya Warnika said on Wednesday.
"The company will announce the winner at the end of the first
quarter of 2006," said Kardaya.
Exxon spokesman Maman Budiman said that interested parties
were invited to submit bids before Nov. 16.
Also, Kardaya said that the country's largest and second
largest privately controlled oil and gas company, PT Medco Energi
Internasional and PT Energi Mega Persada, as well as state firm
PT Pertamina, had submitted bids to swap concessions for the
other 50 percent of Block A owned by ConocoPhillips.
"ConocoPhillips wants to invest here still, so it has asked
for a block swap," said Kardaya.
Block A in Aceh is estimated to contain up to 500 billion
cubic feet (bcf) of gas reserves. The gas contains a high level
of carbon dioxide, which makes exploitation more expensive.
ConocoPhillips, the block's operator, has reportedly stalled
development as it wants a higher share than the 48 percent offered
by the government.
The development of the block is seen as crucial to securing supply
for the province's Pupuk Iskandar Muda (PIM) fertilizer plants,
which have been shut down since early September due to lack of
natural gas.
PIM's president director Hidayat Nyakman said separately that
the company was in negotiations to determine the price for the
gas.
"We will need 110 million standard cubic feet per day (mmscfd)
to run our two plants," said Nyakman in a phone interview. The
price will be higher than US$3 per million British thermal unit
(mmBtu) but will not exceed $4.
According to Nyakman, the reserves in Block A would secure
supply for 11 years if the firm continued to operate two plants,
and 18 years if it operated only one plant.
PIM used to purchase gas from Exxon, the operator of the Arun
gas field in Aceh, at $2.3 per mmBtu.
The contract expired in July.
The government tried to reschedule contracted liquefied
natural gas (LNG) shipments to Asian buyers and buy LNG cargoes
on the spot market to provide supplies for PIM, but failed.