UPDATE 2-Exxon sells stake in Indonesia gas field for $51mln http://today.reuters.com/investing/financeArticle.aspx?type=mergersNews&storyID=2006-04-26T113004Z_01_T85165_RTRIDST_0_ENERGY-JAPAN-JAPEX-UPDATE-2.XML
Wed Apr 26, 2006
(Recasts with Exxon comments, background)
By Ikuko Kao and Muklis Ali
TOKYO/JAKARTA, April 26 (Reuters) - Exxon Mobil Corp. (XOM.N: Quote, Profile, Research) has sold its stake in a gas field in Indonesia's Aceh province for $51 million to a multinational consortium, as the U.S. energy giant struggles with the field's small and costly production.
The consortium comprising Japan Petroleum Exploration Co. (1662.T: Quote, Profile, Research) (JAPEX), Indonesia's PT Medco Energi International Tbk (MEDC.JK: Quote, Profile, Research) and Britain's Premier Oil Plc (PMO.L: Quote, Profile, Research) jointly bought Exxon's 50 percent stake in block A of the gas field in northern Sumatra island, JAPEX and Exxon said on Wednesday.
"We have reached a deal at $51 million with a consortium," an Exxon Mobil official, who declined to be identified, told Reuters.
The official said the world's biggest oil company sold its stake because the assets did not fit with its long-term plans as the field was too small.
Gas reserves in the block are estimated at about 500 billion cubic feet but the gas contains carbon dioxide, which makes it costly to develop. Exxon Mobil also operates the giant Arun gas field in Aceh, where production has been sporadically disrupted by technical problems and separatist conflict. JAPEX said in a statement that ConocoPhillips (COP.N: Quote, Profile, Research), the operator of the field, still holds a 50 percent stake.
Last year, Jakarta urged ConocoPhillips, the third-largest oil firm in the United States, to sell its stake if it was not able to move faster in developing the area, gas from which was urgently needed by local fertiliser firms in Aceh.
EXXON IN INDONESIA
Indonesia, Asia Pacific's sole OPEC member, which has far more gas than it has oil, is trying to phase out costly oil-fired power generation and use more of its cheaper, cleaner natural gas domestically, but faces limited supplies due to long-term LNG export commitments, of which it is reviewing. An official from Indonesian energy watchdog BPMIGAS had said that ConocoPhillips was seeking to swap its stake in block A for another field in Indonesia and that Exxon Mobil would sell its stake.
A BPMIGAS official said on Wednesday the regulator had not received any information on who had bought the Exxon stake, but said it had no authority to intervene in stake sales.
Exxon Mobil's stake sale came a month after the U.S. company and Indonesia's state oil firm Pertamina signed a joint-operation deal for the giant Cepu oilfield after a five-year deadlock, a litmus test for the country's investment climate.
The world's biggest company said development of the $2.6 billion Cepu oil and gas project was on track for this year.
A BPMIGAS official had said foreign investors remained concerned over the security situation in Aceh area despite a peace pact last August ending decades of conflict with rebels, under which Indonesia withdrew thousands of troops and rebels decommissioned their weapons.
A U.S. court last month ruled that Exxon Mobil must face a lawsuit by villagers who say the company contributed to alleged human-rights abuses by Indonesian troops at facilities it operated in Aceh, a decision Exxon said it would appeal against.
Exxon had said the ruling could set a precedent of companies abroad being held liable for actions of the government in their host country.
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