Wednesday, October 18, 2006

Government Breaks ExxonMobil’s Contract

Tuesday, 17 October, 2006 | 16:02 WIB

TEMPO Interactive, Jakarta: The government broke ExxonMobil’s contract in Block D-Alpha Natuna although the United States’ oil company insists it will continue activity until 2009. Energy and Mineral Resources Minister Purnomo Yusgiantoro said that the contract stipulates that ExxonMobil’s activity in Natuna ends in 2005. “Automatically the contract ends and it doesn’t mean that the government stops the contract arbitrarily,” he said.

According to Purnomo, the government has a strong reason to claim that the contract automatically ends based on the contract’s Articles. “If ExxonMobil still persists, that’s fine because the government has already given a chance to fulfill Natuna Block’s commercial viability,” he said.

The Head of the Oil and Gas Upstream Executive Agency Kardaya Warnika said, “Let them say anything, what can they do?” He said two years after the contract ended in 2005, ExxonMobil still did not carry out activity in line with the contract. Although this is so, ExxonMobil said it will call on gas buyer, Petronas, but the contract is over.

Before, ExxonMobil Oil Indonesia’s President Director Peter L. Coleman, said based on ExxonMobil’s comprehension, they have the right to extend the contract two years twice after the contract ended in 2005. On the condition that he stays committed to developing Natuna.

He explained he has been struggling to develop Block D-Alpha Natuna. In addition, currently negotiation with one of the buyer candidates, Petronas, has come close to agreement.

Gas production, said Coleman, is targeted to be achieved after four or five years developing. For every one billion cubic feet per day, around US$10 billion is required. Gas potential in Natuna totaled 220 trillion cubic feet.


Coleman said, 100 percent profit-sharing for the contractor and zero percent for the government does not mean that the government does not gain anything. The government will have around 50 percent of Natuna gas sales revenue in the form of taxes and bonuses.

Muhamad Fasabeni



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