Bakrie unit, PGN sign contract on natural gas

JAKARTA (JP): Local oil and gas company Lapindo Brantas, Inc., controlled by the Bakrie group, has signed a memorandum of understanding to supply natural gas worth US$300 million to state gas company Perusahaan Gas Negara (PGN) in East Java.

Lapindo Brantas president and chief executive officer Rennier A.R. Latief said on Wednesday that starting next month the company would supply natural gas to PGN for 15 years from its Brantas oil and gas block in East Java.

"In the beginning, we shall supply four million cubic feet per day (mmcfd) of gas, but the supply will gradually increase to 25 mmcfd," Rennier told The Jakarta Post.

PGN would sell the gas to industries and households in the East Java province, he said.

Rennier said that Lapindo entered the Brantas block after buying 45 percent of Huffco and Norcen's shares in 1995. It now serves as the block's operator along with partners Novus, which owns 45 percent, and PT Sarimbi Menur Sari, which owns 10 percent.

According to Rennier, the block has a proven reserve of 154 billion cubic feet of gas in its Wunut field, which is worth $300 million at a price of $2.10 per million British thermal units.

Rennier said that Lapindo is planning to drill other fields in the block for additional gas.

Lapindo is the sister company of Kondur Petroleum SA, the co- owner and operator of the Malacca Straits production sharing contract.

Kondur is currently the second largest local private oil and gas company, behind publicly listed Medco Energy, with an oil output of between 18,000 and 19,000 barrels of oil per day.

Medco currently produces 29,000 barrels of oil per day and 67 mmcfd of natural gas.

Only few local companies figure in the country's oil and gas industry amid the strong domination of foreign oil and gas companies.

Rennier, who is also Kondur's president and CEO, said Bakrie, through its affiliate Far Eastern Hydrocarbon SA, had bought out Kondur, a Panama-registered company, in mid-1995 to gain the company's 5 percent stake in the Malacca Straits block.

After the acquisition, Kondur increased its stake in the block by acquiring the shares of Britain's energy company Lasmo, increasing its stake in the block to 34.46 percent and becoming operator of the block.

Kondur's partners in the block include OOGC Malacca Limited which owns a 32.58 percent stake, Malacca Petroleum Limited with 6.93 percent, Novus U.K. (Malacca Straits Limited) with a 14.16 percent stake and Novus Petroleum Canada (Malacca Strait Limited) with an 11.87 percent stake in the block. (jsk)