Shell may manage Natuna block with conditions: BKPM

The Jakarta Post, Jakarta | Sun, 02/08/2009 1:06 PM  

Chairman of the Investment Coordinating Board (BKPM) Muhammad Lutfi said Saturday that Dutch oil company Shell had a chance at managing the exploration of Natuna D Alpha block should they decide to shift their fuel distillation operation from Singapore to Indonesia. 

"If Shell accepts our offer to move their fuel distillation operation from Singapore to Indonesia, I guarantee Shell would have greater bargaining power as opposed to others [companies]," Luthfi said, as quoted by Antara news on Sunday. 

Luthfi, who is currently on an official visit to the Netherlands with Vice President Jusuf Kalla, added that Dutch Prime Minister Jan Peter Balkenende had previously expressed interest over Natuna D Alpha's exploration on behalf of Shell. 

Located in Riau Islands, the Natuna D-Alpha block is estimated to contain 46 trillion cubic feet of gas, making it the bigest reserve in Asia. However, the block has a high-degree of CO2, making it difficult for exploration unless it is handled by energy companies with advance technology. 

Four international oil companies were reported to have expressed interest in developing the Natuna D Alpha gas project in partnership with state owned oil and gas company Pertamina, including a Chinese and European company. 

The government has, however, yet to decide Natuna's new patron, Luthfi added. 

"There's nothing new about Shell participating in upstream exploration, it would be better if it also shifts its distillation operation to Indonesia," Luthfi said, adding that such a move would create at least 930 thousands of new employment.