ARCO to push on with Irian gas project despite crisis<\/p>\n
JAKARTA (JP): The U.S. Atlantic Richfield Co (ARCO) and
\nBritish Gas (BG) are pushing on with their Tangguh liquefied
\nnatural gas (LNG) project in Irian Jaya despite the global
\ndownturn in demand.<\/p>\n
ARCO Indonesia president and resident manager Leon Cordon said
\nWednesday the company and partners, including state oil and gas
\ncompany Pertamina, would concentrate on engineering and
\nnegotiations with prospective buyers, primarily from Japan and
\nKorea, over the next 24 months.<\/p>\n
\"We are also talking with bankers for financing,\" Cordon said
\nfollowing a meeting with President B.J. Habibie.<\/p>\n
ARCO chairman and chief executive officer Mike R. Bowlin and
\nPertamina's president Soegianto also attended the meeting.<\/p>\n
Cordon said it would take between two years and two-and-a-half
\nyears to raise the necessary project financing.<\/p>\n
\"Then we have about another three years for the construction
\nwork,\" he added.<\/p>\n
Total investment is projected at US$4 billion, with the plant
\nexpected to start production in 2003 or 2004, he said.<\/p>\n
The plant will be fed with natural gas from three production-
\nsharing blocks, including the Muturi Block operated by BG and the
\nWiriagar and Berau blocks which are both operated by ARCO.<\/p>\n
Muturi is 52.63 percent owned by BG Exploration & Production
\nLtd., with the remaining share held by Cairns Ltd, a subsidiary
\nof Malaysia's Genting Bhd.<\/p>\n
Wiriagar is jointly owned by ARCO (80 percent) and Kanematsu.
\nBerau is 48 percent owned by ARCO, 17.144 by Nippon Oil, 12
\npercent by Kanematsu and 22.856 by Canadian Oxy. Ltd.<\/p>\n
ARCO and BG have certified 14.4 trillion cubic feet (tcf) of
\ngas reserves in their Tangguh area off the remote province. The
\narea also has another 3.9 tcf of probable gas reserves and 3 tcf
\nof possible gas reserves.<\/p>\n
According to Cordon, the gas reserves found are equivalent to
\nreserves in Arun, North Sumatra.<\/p>\n
The total proven and probable natural gas reserves of 18.3 tcf
\nin the three blocks mean the Tangguh plant will be able to yield
\nmore than 9.0 million tons of LNG a year.<\/p>\n
Under the production-sharing contract with Pertamina, the
\ninternational contractors have to sell the gas to the local firm.<\/p>\n
ARCO and partners will build two LNG trains with an output of
\n6 million tons of LNG in the first year of production, Cordon
\nsaid.<\/p>\n
Bowlin said Habibie fully supported the project.<\/p>\n
\"Tangguh is the key to preserving Indonesia's position as the
\nworld's leading LNG supplier and a major future source of foreign
\nexchange for the country,\" he said.<\/p>\n
He said the project would lead to considerable infrastructure
\nand community development in the province, creating 8,000 jobs
\nduring construction and 1,000 operating positions after start-up.<\/p>\n
Bowlin noted that Tangguh LNG could also be marketed to the
\ndomestic market as a replacement for crude oil products.<\/p>\n
The country could enjoy many benefits from substituting crude
\noil fuels with natural gas, he said.<\/p>\n
\"By switching power generators and industrial users from
\nimported diesel fuel to domestic natural gas, Indonesia could
\nrealize savings ranging from $100 to $200 million annually.<\/p>\n
\"In addition, domestic natural gas utilization is
\nenvironmentally friendly.\"<\/p>\n
Arco, present in the country for 30 years, also produces oil
\nin its Offshore Northwest Java contract area and gas from the
\nKangean Block in East Java. (jsk)<\/p>",
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