Indonesia hasn't decided on ConocoPhillips share for Aceh gas

Indonesia hasn't decided on ConocoPhillips share for Aceh gas

Soraya Permatasari and Grace Nirang, Bloomberg/Jakarta

Indonesia has not decided whether to give ConocoPhillips, the third-biggest U.S. oil company, a bigger stake to develop a gas field in the northwestern province of Aceh, Indonesia's Coordinating Minister for Economy Dorodjatun Kuntjoro-Jakti said on Monday.

ConocoPhillips and Exxon Mobil Corp. hold a so-called gas production-sharing contract in the Block A gas field. ConocoPhillips is also the field's operator. Under the current contract, the Indonesian government gets 70 percent of the gas produced at the field, leaving the two companies with 30 percent.

The two companies have said their share is too small to make a profit as they have to increase spending to remove high levels of carbon dioxide and sulfur found in the gas.

"We can't decide by ourselves," Kuntjoro-Jakti told reporters in Jakarta after a cabinet meeting. "There's a need for other institutions, including the parliament, to be involved in this decision."

The field can begin production by 2008 should the next Indonesian government reach an agreement with ConocoPhillips, he said. Susilo Bambang Yudhoyono won Indonesia's presidential election after the former general garnered support from three- fifths of voters, the General Election Commission said on Monday.

Indonesia in February asked ConocoPhillips and Exxon Mobil to start developing the Block A field to meet supply shortages at its oldest liquefied natural gas plant.

The field is located in Aceh, a province on the northern tip of Sumatra island, where rebels have been fighting for independence since 1976. Indonesia's government has been trying to win support in Aceh.

Supplies of natural gas to the PT Arun NGL plant fell after Indonesia ordered some of the natural gas produced at another field operated by Exxon Mobil to be diverted to fertilizer-makers in the province.