Petronas to sign gas pact by year-end

Petronas to sign gas pact by year-end

Associated Press, Kuala Lumpur

Malaysia's national oil and gas company aims to sign an agreement by the end of this year develop gas reserves in Indonesia's East Natuna Sea, an official said Wednesday.

"A general memorandum to agree to develop East Natuna will probably be signed by the end of the year," said Muri Muhammad, vice president for gas business of Petroliam Nasional Bhd., or Petronas.

He said that Petronas was in discussions with Indonesia's state-owned oil and gas firm Pertamina and other upstream players in Indonesia.

Muri said Petronas was "looking at utilization of East Natuna gas" starting 2010. But he reiterated concerns about high carbon dioxide content in the area's D-Alpha gas reserves.

"East Natuna is a long term project (with) huge gas reserves," Muri said. "Unfortunately, it has a lot of carbon dioxide ... that may make it commercially very difficult to develop."

Iin Arifin Takyan, Pertamina's upstream director, said the Indonesian company had presented a draft of the memorandum of understanding that would allow Petronas to study their gas reserves.

"We'll hear from them, hopefully in a couple of weeks," said Iin, who was in Kuala Lumpur to present the draft. "Petronas is studying the possibility to buy gas from us and to join in upstream operations."

ExxonMobil Indonesia Inc., a unit of Exxon Mobil Corp., holds a 74 percent stake and operates the D-Alpha gas project in East Natuna. Pertamina holds the remaining 26 percent share.