Indonesia wants Natuna partners to get lower split

JAKARTA Oct 7 (Reuters) - Indonesia wants oil companies partnering with state oil and gas firm Pertamina to develop the $40 billion Natuna natural gas project to get a lower production split, a senior energy ministry source said on Wednesday.

The government has been in a contractual dispute with oil major Exxon Mobil Corp (XOM.N) over the Natuna D-Alpha block, which has about 222 trillion cubic feet (tcf) of gas reserves.

Indonesia said last year it had awarded Pertamina operating rights as it said Exxon Mobil's contract giving it a 76 percent share had expired in 2005. The U.S. oil major has said the contract ran until this year.

"Pertamina will get a 40 percent production split in Natuna. This is special privilege from the government for Pertamina," the source, who declined to be quoted by name, told Reuters.

"The question is what the partner should get. The government wants the partner to get less than 40 percent," the source added.

Indonesia has a standard gas production split of 70 percent in favour of the government and 30 percent for an investor.

The government also wanted Pertamina to choose its partners as soon as possible.

"The terms and condition for Natuna D-Alpha can be sorted out later," the source said.

Pertamina's president director Karen Agustiawan said previously it was waiting for the energy ministry to finalise terms and condition for Natuna before deciding the partners.

Last year, Pertamina named eight potential partners. The firms are Petronas [PETR.UL], Exxon Mobil (XOM.N), Chevron (CVX.N) and France's Total (TOTF.PA), Royal Dutch Shell (RDSa.L), Norway's StatoilHydro (STL.OL), Italy's Eni ENI.M, and China National Petroleum Corp.

Pertamina expects the giant Natuna project to come onstream in the next 8-9 years, provided it gets government approval next year.

Pertamina, which does not have the technical expertise to develop the project alone nor the financing, has said it wants to keep a 40 percent stake with 60 percent to be shared among the partners.

Out of the Natuna D-Alpha block's 222 trillion cubic feet (tcf) of gas reserves, about 46 tcf are thought to be commercially recoverable.

The block, which is about 1,100 kilometres (680 miles) north of Jakarta and 200 km east of the West Natuna fields that feed gas to Singapore, accounts for about a quarter of Indonesia's total commercially recoverable gas reserves of 182 tcf. (Editing by Ed Davies)