Exxon Pulls Out Of Indonesian Offshore Gas Field Project

Exxon Pulls Out Of Indonesian Offshore Gas Field Project

ExxonMobil has decided that it "no longer wishes to continue further
discussions or activity" regarding the East Natuna natural gas block
offshore Indonesia, after having assessed the future development prospects
and costs, a senior manager at Exxon's Indonesian unit told Reuters in an
email on Tuesday.

The East Natuna gas block is thought to be home to the world's largest
reserves of untapped gas.

Exxon has decided not to proceed with plans and talks to take part in the
planned development of the field, Exxon Indonesia's Vice President of Public
and Government Affairs Erwin Maryoto told Reuters.

Back in 1980, Exxon signed a Production Sharing Contract (PSC) for East
Natuna block in the South China Sea. Resource is estimated to contain around
222 trillion cubic feet of wet gas with almost 46 trillion cubic feet of
recoverable hydrocarbon gas, according to Exxon.

In August 2012, a consortium comprising Exxon's affiliate Esso Natuna, PT
Pertamina (Persero), and PTT Thailand signed a restated principles of
agreement (POA) with the Indonesian government for a new PSC to develop East
Natuna. In December 2015, Indonesia's government agreed to extend the POA
for 30 months, to allow for more time for assessment of the global market
conditions and technology for the resources.

The government has received a letter from Exxon on its decision not to
proceed with involvement in the gas block, Reuters quoted Wiratmaja Puja,
director general of oil and gas at the energy ministry, as telling reporters
today.

The development of the block will be "uneconomical for the company under
current terms", Exxon said in its letter, according to the government
official.

Under the current terms, developing the project would make its gas much more
expensive than the spot LNG prices in Asia, according to Puja. Indonesia
intends to invite Exxon to renegotiate the project terms, and might add "a
special incentive" to a possible renewed offer to make the project
economically feasible, the government official said, as quoted by Reuters.

Pertamina, on the other hand, is committed to developing the project, but it
needs a partner to do so, Pertamina's upstream director Syamsu Alam told
Reuters. The project's development is said to cost up to US$40 billion.

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Link to Original Article:
http://oilprice.com/Latest-Energy-News/World-News/Exxon-Pulls-Out-Of-Indones
ian-Offshore-Gas-Field-Project.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com