Natuna gas field looks at China for sales option

Natuna gas field looks at China for sales option

SINGAPORE (Reuters): Another option has emerged for the giant US$40 billion Natuna gas field -- a 4,800 kilometer pipeline to Shanghai in China.

G.A.S. Nayoan, senior executive vice president at Pertamina for gas field development, said selling Natuna gas to China was an option being considered by developers.

"We are not yet in discussion with China, but we have given them already some expose of possibilities, either pipeline gas or liquefied natural gas (LNG)," he told an industry conference in Singapore.

Afterwards, he told reporters that no serious discussions had been held with China but that some "interested parties" had asked about the potential of receiving Natuna gas.

Natuna is the biggest gas field development in Asia with 222 trillion cubic feet of general reserves, which are expected to whittle down to 46 trillion in proven reserves because of a 72- percent carbon dioxide content.

First production is targeted around 2004. Nayoan said the developers, Exxon Corp, Mobil Corp and Pertamina, still kept their options open as to potential markets.

A pipeline to the Indonesian island of Java, one to Thailand, and building LNG processing plants were all being considered. Analysts have maintained that the best option for the costly project was a pipeline to Java.

Earlier this week Thailand said it had decided to delay the purchase of Natuna gas until 2007 from 2003 because of expectations demand would be lower than had been expected. Analysts said other gas field developments, including North West Shelf in Australia and Irian Jaya in Indonesia, would offer cheaper options for potential buyers in the next decade.

Exxon holds a 50 percent stake in the field, Mobil 26 percent and Pertamina 24. However, Pertamina wants to reduce its stake by 13 percentage points and has held talks for more than a year to entice Japanese investors.