The Indonesian Government in October revoked ExxonMobil’s exploration contract, signed in 1973, on the grounds that it was invalid because the company failed to complete a feasibility and economic study.

The Government is keen to have the Natuna field developed to halt declining gas production from Indonesia’s existing fields.

ExxonMobil reportedly hopes to negotiate how to share production from the gas field after Indonesian Vice President Jusuf Kalla last month said the Government may invite new bidders if it cannot reach an agreement with the company.

“We’ve been working on a valid contract for a long time, so we’re happy to begin those discussions and we’ve indicated that to the Government,” the Australian Financial Review quoted ExxonMobil Asia vice president Stephen Greenlee as saying.

“It’s up to both of us and we can look forward to that beginning.”

The company believes the field may contain 1.3 trillion cubic metres of gas – equivalent to 17 years of Indonesia’s gas production.

Developing the site is likely to cost up to $30 billion because the gas is low quality and has very high carbon dioxide content (70%), making it difficult to extract and process.

Indonesia is aiming to raise oil and gas production 30% by end-2009 from the 1 million barrels a day of oil and 75 billion cubic feet of gas it currently produces.