The Indonesian government has decided to terminate its oil and gas contract with Exxon Mobil Corp. at the Natuna D-Alpha area of the Natuna sea, a newspaper reported Friday.

The letter terminating the contract with the U.S. oil giant will be issued in May, reported English daily The Jakarta Post, quoting an official with the Ministry of Energy and Mineral resources.

The decision followed a recommendation letter from the upstream oil and gas regulator.

The production sharing contract for the block was signed by state-run oil and gas firm Pertamina and Exxon in 1980. The contract was amended in 1995 due to technical difficulties faced by Exxon in developing the gas field.

The gas found in the block has a 71 percent carbon dioxide content, making it expensive to extract. The government decided to give Exxon another 10 years to develop the field and allow it to keep 100 percent of the revenue from gas production under the amended contract.

Exxon has spent 400 million U.S. dollars on exploring the block, the biggest in Southeast Asia with 46 trillion cubic feet of recoverable gas reserves, while Pertamina spent 60 million dollars.

The two-decade exploration effort, however, has not so far led to actual production.

According to a government regulation, responsibility for the development of the Natuna D-Alpha block will now be given to Pertamina.

"If Pertamina refuses to develop the block, it will be tendered," said the ministry's director general of oil and gas Luluk Sumiarso.