ARMI takes over Shell's gas block

JAKARTA (JP): The government has approved American company Atlantic Richfiled Muriah Inc.'s (ARMI) acquisition of the Muriah gas block off the coast of Central Java from Dutch energy company Shell, state oil and gas firm Pertamina said on Monday.

Pertamina spokesman Ramli Djaafar said Shell sold its 100 percent stake in the 7,200 square kilometer Muriah block, but he did not provide the value of the transaction.

The block includes the Kepodang gas field, which was discovered in the early 1980s and is estimated to be able to yield about 400 million cubic feet (mmcf) of gas, Ramli said in a statement.

ARMI, which is a subsidiary of American energy company Atlantic Richfield Company (ARCO), plans to develop the Kepodang field, including supplying gas from the field to the Tambak Lorok power plant owned by state electricity company PT Perusahaan Listrik Negara on the north coast of Central Java starting in early 2000.

ARCO, which has been operating in the country for 30 years, is currently involved in 10 production sharing contracts (PSC). It also is the country's biggest gas supplier to the domestic market, with supplies of 600 mmcf of gas per day to Java from its offshore Kangean and Northwest Java blocks.

Ramli said ARCO was trying to market another 1.5 trillion cubic feet of gas from the two fields.

According to data from Pertamina, with the sale of the Muriah block, Shell, a subsidiary of oil company The Royal Dutch/Shell, now operates two oil and gas blocks in the country; the Sembawang II block and the Bukat block, both off the coast of East Kalimantan.

ARCO has aggressively expanded its business in the country over the past two years. It signed two PSC contracts last year on the East Arguni block and the West Arguni block, both in Irian Jaya.

ARCO recently announced it would lay off 50 percent of its employees, reducing its workforce to around 900 people by the middle of the year in order to boost efficiency. However, company president Leon Codron said the company would expand its business in the country despite the reduction in its workforce.

The company will proceed with its US$4 billion Tangguh liquefied natural gas project in Irian Jaya, where ARCO, with British Gas and other partners, has found more than 18.3 trillion cubic feet of proven and potential natural gas reserves. (jsk)