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)