The separatist Free Aceh Movement and the Indonesian government have been fighting since 1976 for control over the oil and gas rich province. Furthermore, according to ConocoPhillips, the gas at the field contains carbon dioxide and is costlier to produce.
Reuters, citing an anonymous BP Migas official, said, “The government is studying whether to agree with 50% for the contractor and another 50% for the government in a gas revenue split. The natural gas from block A is very important to supply domestic fertiliser factories in Aceh. Therefore, the government is considering to give ConocoPhillips incentives.”
“Gas from Block A would supply fertiliser factories in Aceh, which lacks gas feedstock because of lower output in the province’s Arun gas fields, [but] the gas reserve from the block could be enough to supply fertiliser factories for more than 15 years. If [ConocoPhillips agrees], the gas production can begin from 2008,” added the insider.
A standard gas-sharing contract in Indonesia is 30% for the contractor and 70% for the government. ConocoPhillips is the operator of Block A and holds a 50% stake. The balance is held by ExxonMobil Corp.
