ExxonMobil And Chevron Sign Gas Deals in Indonesia

27.01.2009 14:18

Under the agreements signed ExxonMobil is expected to supply gas to fertilizer and related products company PT Petrokimia Gresik and to the state electic power company PT PLN.  As for Chevron, it will provide gas to fertilizer producer PT Pupuk Kaltim. Earlier this week, Chevron said it was reviewing its business plans in Indonesia, but remains committed to developing natural gas fields offshore from East Kalimantan.  Meanwhile, the new gas supply agreements with Chevron and ExxonMobil reflect a change in policy for the Indonesian government, which is requiring stronger commitments from international oil companies in the country to make part of their production available to the domestic market.  Finance Minister Sri Mulyani Indrawati underlined that change of policy at a conference earlier in the week, revealing government plans to prioritize gas production for domestic consumption instead of exports in the coming years.

Chevron, ExxonMobil sign Indonesia gas agreements

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Jan. 25 -- ExxonMobil Corp. and Chevron Corp. signed agreements, valued at $4.7 billion, to supply natural gas to several Indonesian firms.

Under its agreements, valued at $1.4 billion and $1.7 billion respectively, ExxonMobil will supply gas from Cepu block to fertilizer and related products giant PT Petrokimia Gresik and to the state electic power company PT PLN.

For its part, Chevron will supply gas valued at $1.6 billion from its East Kalimantan fields to fertilizer producer PT Pupuk Kaltim.

Earlier this week, Chevron said it was reviewing its business plans in Indonesia, but remains committed to developing natural gas fields offshore from East Kalimantan.

"We are currently reviewing our business plans as part of our normal business planning process and in light of changes in the business environment," said Chevron spokesman Gareth Johnstone.

"That said, we are committed to developing the deepwater projects in the Kutei basin. We look forward to working in partnership with the government of Indonesia and BPMigas in developing these fields," Johnstone added.

Meanwhile, the new gas supply agreements with Chevron and ExxonMobil reflect a change in policy for the Indonesian government, which is requiring stronger commitments from international oil companies in the country to make part of their production available to the domestic market.

Finance Minister Sri Mulyani Indrawati underlined that change of policy at a conference earlier in the week, revealing government plans to prioritize gas production for domestic consumption instead of exports in the coming years.

Mulyani said the change comes as domestic consumption is expected to continue rising in line with growth in local industries and a burgeoning middle class.

Mulyani said the government had no option other than to prioritize the national interest, despite the fact that gas companies might face difficulties in meeting demand from buyers abroad.

To meet the competing demands of domestic and international markets, Mulyani urged producers to maintain or increase production of gas.

According to upstream oil and gas regulator BPMigas, national demand for gas is projected to rise at a rate of 2.8%/year, reaching 6 bcfd by 2020 from 4.2 bcfd in 2007.

Due to the increased demand, BPMigas said the government has increased the proportion of gas for domestic industries to 49.5% in 2008 from 29.6% in 2002.

To help increase Indonesia's gas production, BPMigas chairman Raden Priyono said the government would rely on a number of big LNG projects including the Tangguh LNG plant in Papua, the Senoro LNG plant in Central Sulawesi, and the development of the Masela gas block in the Timor Sea.

Contact Eric Watkins at hippalus@yahoo.com.

Chevron says committed to Indonesia gas project

JAKARTA, Jan 22 - Chevron Corp be review its commercial condition delimited by Indonesia, but remainder committed to surfacing undiluted gas field offshore from East Kalimantan, Borneo atoll, the U.S. key said by the detachment of Thursday.

The Gehem and Gendalo natural gas project in the Makassar Strait would be the deepest offshore gas fields in Indonesia, at river depths range from 2,500-6,000 foot (760-1,800 metres), an municipal servant at grease controller BPMIGAS tell Reuters.

Chevron, Indonesia's biggest oil author, before said it strategic to dig about $6 billion to lug your sock wakeful gas fields crumbling Borneo, as in good health as the Gehem and Gendalo projects, which would sustain Indonesia to crank up its flagging gas give up.

"We be at contribution reviewing our business plans in function of cog of our common business planning act and in wispy of change in the business environment," Chevron spokesman Gareth Johnstone said in a bill.

"That said, we are committed to developing the deepwater projects in the Kutei Basin. We air deflect to engaged in partnership beside the Government of Indonesia and BPMIGAS in developing these fields," he added.

Oil camaraderie in the world enjoy be reevaulating big spirits development given a fly down pelt in oil price, which have made a number of projects uneconomic.

Deepwater projects are chiefly dear to develop.

An official all for energy watchdog BPMIGAS said near be no submission to gain knowledge of the Makassar Strait jut out over.

The joined natural gas reserves in the span sub aqua through the formulate are ballpark at beyond 3 trillion cubic feet.

Indonesia, which has far more gas than oil, has hard-pressed companies to move backwards and forwards faster in developing area as the pastoral scantily requirements the gas for broken industry and export.

Chevron currently produce gas from several other fields in East Kalimantan, but the output is in decline.

(Reporting by Muklis Ali; Writing by Jennifer Henderson/Ed Davies)