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)