ARCO says RI to remain leading LNG supplier

ARCO says RI to remain leading LNG supplier

SINGAPORE (Dow Jones): Indonesia will remain well placed as
the leading liquefied natural gas supplier in Asia-Pacific when
the region emerges from the economic crisis, Herb Vogel, a senior
official with ARCO Indonesia Inc., told Dow Jones Newswires.

Indonesia's role as a significant LNG producer and supplier is
underpinned by its proximity to major demand centers, huge supply
potential and its unique identity as the region's only country
with multiple supply centers, the official said.

Japan and S. Korea, which together account for close to 60
percent of global LNG consumption, are 2,400 nautical miles away
from Indonesia, Vogel said. In the thick of the crisis in 1998
when Asia was bruised by a depressed market, Indonesia supplied
42 percent of Asia-Pacific's LNG requirements, he added.

Indonesia has two LNG plants - located in Arun and Bontang -
with a combined capacity of 29.5 million metric tons a year.
Algeria is the only other nation in the world which boasts
multiple plants, with its total LNG capacity of 22.5 million tons
a year coming from four different sources.

Indonesia makes up more than 50 percent of the Asia Pacific's
LNG capacity. Other producing nations in the region are Malaysia,
Australia and Brunei.

Indonesia's supply diversity, and security as a result, has
been a salient feature of the country's success in the LNG
market, Vogel said.

He said Indonesia is well placed to grab any opportunities
when demand emerges for additional LNG supplies or when the
majority of existing contracts expire in late 2004 and early
2005.

To plug into that opportunity, ARCO Indonesia, a subsidiary of
Atlantic Richfield Co., or ARCO, has been pressing ahead with its
plans to build a $4 billion LNG plant in Tangguh, with completion
scheduled by late 2004, Vogel, vice president of the project,
said.

Construction of the plant, which is expected to take three and
a half years to complete, will start "late 2000 or early 2001,"
the official said. He added that Pertamina, Indonesia's state oil
company, will put in place necessary arrangements to sell the
output.

The fact that Japanese companies together have a 20 percent
interest in the project improves the prospects of selling a
significant portion of Tangguh LNG to Japan, the largest LNG
consumer in the world, Leon Codron, president of ARCO Indonesia
said.

The plant will be fed from a number of gas fields located
within the Beraua, Muturi and Wiriagar blocks. The fields have
proven and probable reserves of 18.3 trillion cubic feet TCF).

The 6 million tons per annum plant requires only 8 TCF for a
20-year supply which means there is room for further expansion of
the plant when the need arises, Vogel said. ARCO has plans to add
four more trains in future, he added.

In addition, "one of the reservoirs in the fields has prolific
deliverability which is what is required for an LNG plant," he
said. The fields extend from onshore to shallow water up to water
depths of 80 meters, he added.

"We see a lot of exploration potential in the vicinity of the
plant," and ARCO will soon begin drilling to explore those areas,
Vogel said.

ARCO is the largest Indonesian gas producer, with output of
nearly 700 million cubic feet a day feeding the Java gas market,
he said. All the gas comes from multiple fields in two production
sharing contracts, he added.

ARCO owns nearly 36 percent of Indonesia's 16.7 million tons a
year Bontang LNG plant, the largest single plant in the world.