Petronas to buy gas from Natuna

Moch. N. Kurniawan, The Jakarta Post, Jakarta

Petronas, the state-owned oil and gas company of Malaysia, has shown interest in buying gas from up to 1 billion standard cubic feet per day (bscfd) for 20 years, beginning in 2010, in the South China Sea, according to a senior official at Indonesia's oil and gas firm Pertamina.

Pertamina upstream director Iin Arifin Takhyan said on Monday that Pertamina and Petronas will hold talks on Jan. 22 in Kuala Lumpur to discuss further details of the purchase plan.

Petronas officials, "have said they want to buy gas from the D-Alpha block ... so we are going to have a 'serious' talk next week," Iin told reporters during the Gas 2002 Indonesia Conference.

He declined to offer details, but did note that Petronas had proposed to have a share in the D-Alpha block.

Iin added that it was unlikely that next week's negotiations would immediately finalize a memorandum of understanding.

Seventy-six percent of the D-Alpha block is owned by the American firm ExxonMobil Affiliates, which is also the operator of the block; the remaining 24 percent is held by Pertamina.

The block, which is located in the Natuna Sea, is estimated to have recoverable gas reserves of some 46 trillion cubic feet.

The development of the reserves has been hit by uncertainty, however, owing to the absence of buyers vis-a-vis high development costs from a heavy presence of carbon dioxide contained in the reserves.

In March of last year, Pertamina officials agreed with their Petronas counterparts to deliver the latter gas of up to 250 bscfd for 20 years starting in July of this year from a Conoco- operated field in West Natuna.

They have held further talks over gas supplies with representatives from the Malaysian firm, but no outcome has been reached yet due to disagreements over pricing.

Iin also noted that Pertamina has re-offered the Thai government a chance to buy gas from the D-Alpha block, after earlier talks were cut short by the 1997-1998 financial crisis that swept through the region.

"Thailand's economy is improving now, so we asked them to reconsider buying gas from the D-Alpha block," he said.

Elsewhere, Iin said Pertamina was planning to invest in the upstream oil and gas industry in Oman or Yemen as part of its expansion program.

But, he added, Pertamina officials had yet to make any agreements with prospective partners in those countries.