Exxon Corp., Indonesia to Develop Natural Gas Field in S. China Sea

Exxon Corp. and the government of Indonesia agreed to spend up to $40 billion over several decades to develop a huge natural gas field in the South China Sea.

The Natuna field could produce about 2 billion cubic feet of gas each day for more than 30 years, the company said in announcing the deal Wednesday. If the field’s potential is realized, Exxon’s stake would boost its gas holdings by 50%.

The deal between Exxon and Pertamina, Indonesia’s national oil company, reflects the importance and size of the vast untapped energy resources in the Asia-Pacific region. It could also mean new jobs for U.S. businesses that help set up wells and offshore platforms.

But first, Pertamina must find Far Eastern buyers for the gas, which would have to be liquefied before shipment.

Demand in the Far East is expected to grow rapidly into the next century. Exxon expects primary markets to be Japan, Taiwan and Korea, said Fritz Voigt, vice president of gas for Exxon Co. International.

Remaining questions make it too soon to calculate the long-term impact of the massive project, analysts said.

Once sale agreements are obtained, it will still be about eight years to its start, Voigt said. Exxon’s minimum investment would probably be about $6 billion, he said.

“It’s a big number, but basically I think the concentration of gas is so enormous that they should be able to make it economic,” said George Gaspar, an analyst at Robert W. Baird & Co.