Indonesia-Singapore to sign gas sales agreement today<\/p>\n
JAKARTA (JP): State oil and gas company Pertamina has said it
\nwill on Friday (today) sign a contract to supply Singapore's
\nSembawang Gas (SembGas) with natural gas from the West Natuna gas
\nfields through a 640-kilometer underwater pipeline.<\/p>\n
The ceremony to sign the contract has been delayed several
\ntimes, but Pertamina spokesman Ramli Djaafar said in a statement
\nreleased on Thursday that it would finally take place at the
\nMinistry of Mines and Energy at 10 a.m. on Friday.<\/p>\n
Industry sources also said that Minister of Mines and Energy
\nKuntoro Mangkusubroto would renew the production sharing
\ncontracts (PSC) held by three contractors grouped in the West
\nNatuna consortium. The three contractors are Premier Oil of
\nBritain, Conoco of the United States and Gulf Resources of
\nCanada.<\/p>\n
Pertamina and SembGas signed a memorandum of understanding
\nover gas from the West Natuna fields last July, but there have
\nsince been a number of delays to signing the contract.<\/p>\n
One source of delay was the refusal of Pertamina's production
\nsharing contractors to participate in the deal unless the
\ngovernment extended their right to exploit the gas fields in the
\nSouth China Sea.<\/p>\n
Under the gas sales contract, Pertamina will supply SembGas
\nwith natural gas from the West Natuna fields for 22 years from
\n2001 to 2023.<\/p>\n
However, Gulf's contract in the Kakap block expires in 2005,
\nwhile Premier's contract in the A block and Conoco's contract in
\nthe B block end in 2009 and 2018 respectively.<\/p>\n
The contractors have asked the government to extend their
\ncontracts to cover the whole period of gas sales so that they can
\nearn an acceptable return on investments they have made in the
\ngiant project.<\/p>\n
The contractors claim they will invest US$1.5 billion to
\ndevelop the gas fields and transportation facilities, including a
\n640 kilometer undersea pipeline costing $400 million to ship gas
\nfrom West Natuna to the island of Jurong off Singapore.<\/p>\n
SembGas will use the gas to feed power and petrochemicals
\nplants.<\/p>\n
Sale of the West Natuna gas will reportedly generate total
\nrevenue of $7.5 billion over 22 years, $2.4 billion of which --
\nor $180 million per year -- will go to the government in taxes
\nand profit sharing.<\/p>\n
The gas will be the first Indonesia has exported through a
\npipeline. Indonesia is currently the world's largest exporter of
\nliquefied natural gas (LNG). Most exports are directed toward
\nSouth Korea, Japan and Taiwan.<\/p>\n
Delay<\/p>\n
Meanwhile on Thursday, legislator Priyo Budi Santoso of the
\nruling Golkar called on the government to review its decision to
\nextend the contracts awarded to Premier, Gulf and Conoco.<\/p>\n
He said the extension demanded by the three contractors would
\ncut the government's earnings from sale of the gas.<\/p>\n
\"I am not against extending the contracts, but the contractors
\nhave made use of the current economic crisis and the country's
\ndire need of investment to force the government into accepting
\nunfavorable terms,\" Priyo said.<\/p>\n
Priyo said that Premier, Conoco and Gulf had asked the
\ngovernment to cut its share of proceeds from the sale of gas from
\nthe West Natuna fields to 65 percent in the new contracts from 70
\npercent at present.<\/p>\n
The contractors also asked the government to increase their
\ninvestment credit to 55 percent in the new contracts from 17
\npercent at present. Under the new investment credit scheme, the
\ngovernment will have to reimburse contractors by almost twice as
\nmuch more than at present for exploration activities.<\/p>\n
Priyo estimated that the government would lose $300 million in
\npotential earnings due to the new contractual terms.<\/p>\n
\"The new contractual terms will force us to accept a loss. The
\ngovernment should delay extending the contracts if the
\ncontractors refuse to change the terms. Otherwise, I'll never
\nstop criticizing this project,\" Priyo swore. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesia-singapore-to-sign-gas-sales-agreement-today-1447893297",
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