ConocoPhillips sees strong prospects in RI gas market

ConocoPhillips sees strong prospects in RI gas market

Tony Hotland, Jakarta

A top official from leading U.S. oil and gas company
ConocoPhillips expressed on Monday confidence over the gas market
in Indonesia, citing abundant supply and improving political
stability as supporting factors.

ConocoPhillips Asia-Pacific president R.M. Lance said that as
the domestic gas market was growing, more infrastructure needed
to be improved.

"We think the market really has a good future here. I mean,
there's a lot of gas in Indonesia. It's just a matter of how
quickly the market develops ... how quickly can the industrial
users and the infrastructure get in place in West Java and East
Java to support more gas coming in. That's the balance that'll
have to be struck over time," Lance told The Jakarta Post.

ConocoPhillips signed on Monday a US$4.3 billion gas deal with
state gas distributor PT Perusahaan Gas (PGN). The U.S. company
agreed to sell 2.3 trillion cubic feet to PGN within 17 years
starting from 2007.

"There's lots of supply here and we think there are going to
be a lot of market opportunities down the road, so we're very
interested," Lance said.

Indonesia has natural gas reserves of 140 trillion cubic feet,
with only 80 trillion cubic feet of gas contracted out. Indonesia
is the largest liquefied natural gas (LNG) producer in the world,
exporting 55 percent of its annual production of 3 trillion cubic
feet.

With oil prices at record new highs, Lance acknowledged that
the situation provided an advantage for gas companies.

"People are spending a lot of money on diesel fuel to generate
electricity, and to power their plants. They are likely to want
gas as it's cheaper now than oil or diesel. I think our gas is a
marketable commodity and it should offer an incentive over
diesel," he said.

Lance added that he believed Indonesia was well on its way to
regaining confidence from foreign investors due to its
strengthening political stability.

"I think Indonesia's gaining in confidence. There are still
some companies out there questioning and watching closely to make
sure, but certainly the (May and July) elections seem to have
gone well. Everybody saw they went very well. I think that has
added a lot to the confidence that investors have in Indonesia,"
Lance affirmed.

Currently, ConocoPhillips has 13 production-sharing contracts
(PSC) with the Oil and Gas Upstream Regulatory Agency (BP Migas),
from Sumatra to Papua.

Asked about ConocoPhillips' future plans in Indonesia, Lance
said simply, "of course, we would like to have more gas to market
-- to sell more gas.

"Currently, we have another 2 trillion cubic feet (TCF) we
could sell. We're having conversations with PGN, and we are in
discussion with (state electricity company) PLN, and other
markets both within Indonesia and outside, trying to sell that
gas," he said.

Moreover, Lance noted, Indonesia needed to work harder to
assure national stability and security to entice more foreign
investors.