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ExxonMobil drops discussions over gas field

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Reuters are reporting that the Indonesian unit of ExxonMobil has announced that it no longer wishes to continue further discussions or activity involving the country's East Natuna natural gas block, believed to hold one of the world's largest reserves of untapped gas.

Exxon's exit likely means further delays in developing a field that was first discovered in the 1970s. Difficulties with the field have included contract disputes and the remoteness of the block, which is on the southern edge of the South China Sea.

The East Natuna field holds approximately 46 trillion ft3 of recoverable gas resources, although it comes with a carbon dioxide content of more than 70% – which also increases the cost of extracting useable fuel.

State energy firm Pertamina had expected to sign a production sharing contract with ExxonMobil and Thailand's PTTEP for the project last year.

Developing the project under current terms would make its gas too expensive, at about US$10 – 15 per mmBtu. That compares with spot prices for LNG in Asia that are currently less than US$6 per mmBtu LNG-AS.

Malaysia's Petronas and France's Total were previously involved with the East Natuna project, but they have both pulled out.

In the past, Pertamina's official has said that developing the East Natuna project could cost up to US$40 billion.

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