Clinton, Soeharto to see signing of LNG contract
Clinton, Soeharto to see signing of LNG contract
JAKARTA (JP): U.S. President Bill Clinton and Indonesian
President Soeharto are expected to witness the signing of a
contract for a US$34 billion natural gas liquefaction project in
Natuna of Riau.
"We are trying to put the signing of the contract for the
development of a liquefied natural gas (LNG) plant in Natuna into
the agenda of President Clinton during his Indonesian visit to
attend the second leadership meeting of the Asia Pacific Economic
Cooperation (APEC) in mid November," Minister of Mines and Energy
I.B. Sudjana told reporters after opening a one-day seminar on
power generation yesterday.
Sudjana said that both the state oil company Pertamina and its
contractor Esso Natuna Inc., an affiliate of the U.S. Exxon
Corp., are finalizing their negotiations on the development of
the LNG project in Natuna -- about 1,110 kilometers (km) north of
here and about 600 km northeast of Singapore.
"The two parties are expected to conclude negotiations soon on
two main issues -- on taxation and the royalty payment." he said.
He acknowledged that a requirement on the use of local
components for the gas project has also been one of the difficult
subjects negotiated by the two parties.
The two parties have reportedly agreed on the use of local
contents worth $34 billion, of which $10 billion will be
implemented during the construction of the project.
Esso has reportedly invested around $16 billion for the
initial development of the gas field in the Natuna bloc since its
first operation in 1980. Operating under a production sharing
contract with Pertamina, Esso holds a 50 percent interest in the
project. The other 50 percent is held by Pertamina.
The project, supported by the largest concentration of gas
reserves in the world, is planned to have six treating platforms,
six drilling platforms (each with 36 wells), two living quarters
platforms and four injection platforms.
The treating platforms are designed to be capable of the bulk
extraction of carbon dioxide.
Once the project is completed it will be able to produce up to
14 million tons of LNG per year. In comparison, the LNG plants in
Arun, North Sumatra, and in Bontang, East Kalimantan, are capable
of producing a total of 25 million tons of LNG per annum.
The gas deposits in Natuna are estimated at 45 trillion cubic
feet, an Esso report said. (fhp)