Business | Oil & Gas

Pertamina seeks partner for Indonesia gas project

Pertamina, Indonesia's state oil company, is seeking partners to put up the $52 billion needed to develop the Natuna Sea natural-gas area after the government took control of the field from ExxonMobil Corp.

  • Bloomberg
  • Published: 01:04 February 9, 2008
  • Gulf News

Jakarta: Pertamina, Indonesia's state oil company, is seeking partners to put up the $52 billion needed to develop the Natuna Sea natural-gas area after the government took control of the field from ExxonMobil Corp.

Indonesia handed over the field to Pertamina after the failure of talks with the world's second-biggest oil company by value, Indonesia's vice-president Jusuf Kalla said on Friday. The nation is trying to start new gas projects to make up for a decline in output from existing plants in Aceh province and East Kalimantan and the diversion of the clean fuel to domestic industries.

Pertamina's estimate of the cost of developing the Natuna D-Alpha area, northeast of Borneo island, is more than double Exxon's previous forecast of $25 billion, Ferederick Siahaan, Pertamina's fin-ance director, said by phone. Exxon won the contract to explore for gas in 1980.

Rising costs

"Costs have risen since the estimate made years ago by Exxon because of a tight market in drilling rigs," Siahaan said. "Pertamina is now seeking partners with large capital and technology. That may also include Exxon."

Pertamina plans to export the gas from Natuna in the hope of fetching better prices in order to offset the high cost of extracting the fuel, Siahaan said. The project will require more costly technology to extract and capture carbon dioxide, which makes up 70 per cent of the deposit. Total, Royal Dutch Shell and Norway's StatoilHydro have the technology to separate the carbon dioxide and transport the gas to market safely, Pertamina's president Ari Soemarno said in September.

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