Conoco speeds up gas project in West Natuna

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)