Amerada moves to develop Ujung Pangkah

Amerada Hess Co., and partner ConocoPhillips, signed two major construction contracts on Friday to signal the start of major investment to develop the Ujung Pangkah gas block in East Java -- where the two global energy giants act as the operator.

The combined contracts are worth about US$110 million, a press statement said.

"Ujung Pangkah represents an exciting new investment for us as we build the basis of a long term business in Indonesia.

"The project will provide a significant economic boost to industry in the region and, ultimately, provide a reliable and cost effective source of energy for the local area," Amerada Hess President and General Manager in Indonesia Colin Munro said in the statement.

About $60 million of the deal will be spent procuring goods and services in Indonesia.

The two deals have been awarded to Indonesian companies for the engineering, procurement, construction and installation (EPCI) of the facilities to produce, process and supply gas from the field to, among other consumers, state power utility PT Perusahaan Listrik Negara (PLN)'s power generation plant at Gresik.

The first contract, awarded to a consortium of construction firms PT Raga Perkasa Ekaguna (RPE) and PT PAL Indonesia, covers the provision of offshore facilities consisting of an unmanned well head platform and a 42-kilometer export line.

The second contract, awarded to PT Inti Karya Persada Teknik (IKPT), covers the provision of onshore processing facilities and the gas pipeline onward to PLN gresik.

State gas distributor PT Perusahaan Gas Negara (PGN) is also in talks with the operator to purchase about 100 million standard cubic feet per day (mmscfd) to supply small and medium enterprises (SMEs) in the province. -- JP