Conoco-Premier row 'not to affect Malaysian gas sales'

Conoco-Premier row 'not to affect Malaysian gas sales'

JAKARTA (JP): The dispute involving gas producers in the West
Natuna section of the South China Sea would not affect the
current negotiations for gas sales between the Indonesian state
oil and gas company Pertamina and its Malaysian counterpart
Petronas, a Pertamina official said on Wednesday.

"It's Pertamina's internal affair, it won't affect our
(planned) gas sales to Malaysia," Pertamina's director of general
affairs Sjahrial Daud told a media briefing at the Indonesian
International Oil, Gas and Energy Conference and Exhibition
(IIOGE) 2000.

Sjahrial, however, neither provided details on the dispute nor
explained the measures to be taken by Pertamina to end it.

British energy company Premier Plc., American energy company
Conoco Inc. and Canadian energy company Gulf Resources are
Pertamina's production sharing contractors for the development of
the West Natuna field.

Grouped under the West Natuna consortium, the three companies
will supply 325 million cubic feet of gas per day to Singapore's
Sembawang Gas starting next year.

But three months ago, Premier reportedly brought Conoco to
arbitration for its plan to "use" the consortium's gas pipeline
to supply its gas to Malaysia. Premier also brought Gulf to
arbitration for approving Conoco's plan.

Under its plan, Conoco is to supply Petronas with gas from its
Belanak gas field in West Natuna.

Pertamina expects a deal with Petronas by next month for the
supply of the gas. If it materializes, the contract would
generate between US$7 billion and $10 billion in revenue for the
government over the 20-year term of the contract.

Conoco reportedly planned to connect the consortium's 640
kilometer pipeline stretching from West Natuna to Singapore with
a pipeline it is to build to transport its gas from West Natuna
to Malaysia.

Gulf approved the plan on the basis that Conoco would pay the
consortium a fee.

Premier, however, objects to the plan and filed for
arbitration three months ago in London.

A spokesman for Premier in London refuted the notion that the
company went to arbitration because it was unhappy about Conoco's
possible selling of the gas to a third country.

"This dispute is about clarification of operating procedures
under the West Natuna transportation agreements to which Premier,
Gulf Resources Indonesia and Conoco are all parties," the
spokesman was quoted as saying by the Dow Jones news agency.

Director general for oil and gas at the Ministry of Energy and
Mineral Resources Rachmat Sudibyo said the government had no
plans yet to interfere in the dispute.

"We will try in so far as possible not to interfere in this
matter because it's an intercompany dispute," Rachmat told
reporters.

He said Pertamina must first try to resolve the dispute
itself, before asking for the government's help.

"However, we will certainly provide assistance where matters
of principle are concerned," he said without elaborating. (bkm)