Mobil Oil gets 26% interest in Natuna gas project

Mobil Oil gets 26% interest in Natuna gas project

JAKARTA (JP): The state-owned oil company Pertamina has
granted Mobil Oil of the United States a 26 percent interest in
the Natuna gas project, the largest gas project in Indonesia.

"After the acquisition by the U.S. company, Pertamina's
interest in the gas project was reduced to 24 percent from 50
percent," Pertamina's president, Faisal Abda'oe, told reporters
after signing the acquisition agreement yesterday with the
President of Mobil Oil Indonesia, Bill Scoggins.

Abda'oe said that it granted the U.S. company a stake in the
project because it had 25 years experience in operating the
natural gas field in Arun, Aceh. Gas reserves at the field are
running out. It is expected to be closed down by 2014.

He said the acquisition was still subject to the government's
approval.

According to Abda'oe, Mobil Oil has not paid Pertamina for its
acquisition but will contribute to the estimated US$40 billion
cost of developing the Natuna field, which is located in the
South China Sea, about 1,100 kilometers north of Jakarta.

Indonesia plans to build two liquefied natural gas plants as
part of the Natuna project, which are expected to start
production by 2003/2004.

According to an earlier agreement on the gas field between
Pertamina and Esso Exploration & Production Inc., Pertamina would
have a 50 percent interest in the project and so would Esso.

The agreement also specifies that Esso, as an operator of the
gas field, would share its after-tax profits from the project
with Pertamina. The gas field has an estimated gas reserve of 46
trillion cubic feet.

Pertamina is also offering 13 percent of its current interest
in the Natuna project to Japanese investors, which may in time
see Pertamina's share reduced to 11 percent interest.

"Seemingly, they (the Japanese investors) are interested in
acquiring a stake in the Natuna gas project," said Abda'oe,
adding that at least 13 Japanese companies have shown interest in
Natuna.

Scoggins said the natural gas project looked promising. "The
gas from Natuna will be sold to traditional buyers in Japan,
South Korea and Taiwan," he said.

Because Indonesia is relatively near the buyers, its liquefied
natural gas is expected to be more competitive than the gas
produced in the Middle East.

But Abda'oe noted that Indonesia seeks to sell its gas to
other potential buyers including China, Thailand and India. (13)