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Thu, Oct 12, 2006 - Page 10 News List

Indonesia says it canceled contract with Exxon Mobil


Indonesia has terminated a contract with US oil company Exxon Mobil Corp to develop a natural gas field in the East Natuna Sea and is negotiating a new deal with the company, the energy minister said.

Exxon Mobil insisted the deal stood, saying it had told the government it would fulfill its contractual obligations to develop the Natuna block and was in discussions with potential gas buyers.

A lengthy dispute between the two parties would concern foreign investors, who have long complained that poor contract enforcement in Indonesia make it hard for multinational companies to tap the country's rich natural resources.

Energy Minister Purnomo Yusgiantoro told reporters on Tuesday he had "met with Exxon and officially told them that the contract has been terminated because they couldn't propose the commercialization and feasibility for the development of Natuna."

Exxon Mobil and state-owned Pertamina are the joint contractors for Natuna, with Exxon Mobil holding a 76 percent contractor's share compared with Pertamina's 24 percent. Discovered in 1973, the field is estimated to have 1.3 trillion cubic meters of recoverable gas.

Exxon Mobil's local unit spokesman Deva Rachman said the deal was still valid.

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