Govt plans to restart marketing Natuna gas

Govt plans to restart marketing Natuna gas

JAKARTA (JP): The government plans to restart marketing gas
from the giant East Natuna gas field because the owner of the
exploitation rights has developed new technology which can
provide liquefied natural gas (LNG) at a much lower cost.

The chairman of the government-commissioned Natuna Gas
Development Project Team, Faisal Abda'oe, said on Thursday that
the giant United States energy company Mobil, which controls the
field, had developed Integrated LNG Floating Barge technology
which considerably reduced the cost of extracting clean natural
gas from the East Natuna field.

The East Natuna field lies in the South China Sea and
reportedly contains 42 trillion cubic feet (tcf) of natural gas.
However, the gas has a high content of carbon dioxide (CO2) which
must be separated before the gas can be sold, driving the price
of the gas beyond the price of gas from other fields.

Abda'oe announced last year that the team had decided to delay
marketing gas from the field because the price was uncompetitive.

"With a considerable cost reduction, Natuna gas will become
competitive and so we can resume marketing it," Abda'oe, who is a
former president of the state oil and gas company Pertamina, told
journalists after meeting President B.J. Habibie.

The East Natuna gas block, also known as the Natuna Alpha
block, is 50 percent owned by Mobil, 26 percent by Esso and 24
percent by Pertamina.

Mobil and Esso recently announced a planned merger which will
create the world's largest energy company.

No buyer has yet been found for gas from the field, despite
the government's high-profile marketing efforts.

Thailand earlier expressed an interest in buying gas from the
field, but was forced to delay striking a deal by the untimely
arrival of the Southeast monetary crisis.

Gas reserves also lie in an offshore area to the west of the
Natuna islands. Exploitation rights to these reserves are owned
by Britain's Premier Oil, Conoco of the United States and Gulf
Resources of Canada.

Pertamina is also actively marketing gas from an LNG project
in the Tangguh area of Irian Jaya in the east of the country.

The Tangguh LNG project will be fed with natural gas from the
Wiriagar, Berau and Muturi blocks, which together reportedly have
proven and probable gas reserves of 18.3 trillion cubic feet
(tcf), with further potential gas reserves of 3.9 tcf.

The project is owned by the Atlantic Richfield Company (ARCO)
from the United States and British Gas.

Indonesia is currently the world's largest LNG exporter, with
annual exports of 28 million tons. (jsk/prb)