The Indonesian government might take over a huge natural gas field run by ExxonMobil Corp when its contract expires in January.
The Natuna D-alpha block contains about 70 percent carbon dioxide and is thus expensive to develop and difficult to sell. The field has around 222 trillion cubic feet of gas, of which 46 tcf is thought to be commercially recoverable.
Energy Ministers Purnomo told reporters that if ExxonMobil has no commitment to produce or sell gas, Indonesia will terminate the contract.
Indonesia amd ExxonMobil had signed an agreement in 1995 to invest $40 billion in the offshore gas project, however tapping the reserves has proved difficult. ExxonMobil said it was looking for buyers for gas from Natuna D-Alpha.
The gas in this field accounts for about 25 percent of Indonesia's total gas reserves of 182 tcf.
ExxonMobil has a 76 percent stake in D-Alpha with the remaining 24 percent with state energy firm Pertamina.
Indonesia is trying to phase out costly oil-fired power generation and uses more of its cleaner, cheaper natural gas domestically. The country is Asia Pacific's sole OPEC member with more gas than oil.
Exxon was engaged in a 5 year row with Pertamina over the operatorship of the $6.2 billion Cepu oilfield, which was recently resolved and has faced sporadic problems in the country.
A government move not to renew Exxon's contract will create uncertainties about doing business in Indonesia amongst foreign investors. Added to this are worries about Indonesia's legal system, labor and mining policies.
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