Conoco speeds up gas project in West Natuna

JAKARTA (JP): Conoco Indonesia Inc. of the U.S., the leading contractor of the West Natuna Gas consortium, said on Thursday that commercial production would start in April 2001, or three months ahead of the original schedule, at no extra cost.

Conoco vice president of development A.R. (Dudung) Natanegara said the consortium had revised its completion target because of encouraging progress during the project's construction.

"We're working very hard to meet our (new) target," Dudung told journalists during a ceremony to award 155 scholarships from the consortium to Riau students.

The consortium, which includes Premier Oil Natuna Sea Ltd of Britain and Gulf Indonesia Resources of Canada, is developing the huge Natuna gas fields located in the Southeast China Sea.

Working under a production sharing contract with Indonesia's state oil company Pertamina, the consortium is obliged to supply gas, under a contract signed in January, to Sembawang Gas (SembGas) of Singapore for 22 years beginning in July 2001.

The consortium had not encountered the expected delays during the initial phase of the construction, Dudung said.

In January, the contractors would begin installing a 650- kilometer underwater pipeline from the Natuna gas fields to Singapore at a rate of between 2.5 to 3 km a day, he said.

He said sea bed preparation for the pipes would start in a week, while channel construction for the pipes, or "trenching", was in progress in Singapore, he said.

Production would probably begin at about 50 million cubic feet per day, gradually rising to a peak of 325 million cubic feet.

The consortium and Pertamina came under fire from Indonesian politicians in May for awarding McDermott Indonesia -- a subsidiary of J. Ray McDermott SA of the U.S.-- with the US$335 million project to install the underwater pipeline.

They said political pressure was behind the appointment of McDermott, as former president Soeharto's close friend, Mohammad "Bob" Hasan had owned an 18 percent share in the company.

Dudung declined to comment on the allegations but said that it was in the interests of all parties that the project went ahead.

The acceleration of the project entailed no additional cost to the original $335 million cost of the project, he said.

He said the pipeline project, at $500,000 per kilometer, was below the world's average of between $750,000 to $1 million.

The Association of Indonesian Steel Pipe Manufacturers in July accused Japanese trading house Marubeni of dumping practices to win the tender to supply the pipes to McDermott.

Dudung said Conoco would give local companies an opportunity to participate in future piping construction.

The company reported earlier this month that it had found natural gas in a nearby operation in the South Natuna Sea.

During Thursday's ceremony, the consortium awarded 400 students from Riau with annual Rp 1.5 million scholarships for the next two years.

The scholarship program cost the consortium about Rp 1 billion ($142.000), Dudung said, adding that other community relation programs were in progress. (03)