Contractors to invest $1 billion in western Natuna gas project

JAKARTA (JP): Contractors working in the gas fields in the western Natuna islands plan to invest about US$1 billion over the next three years to establish facilities for the delivery of gas from the area to Singapore.

Rab Spiers, the president of Premier Oil Natuna Sea Limited, a subsidiary of Britain's Premier Oil, said the money would be used to develop gas field facilities in the area, to continue gas field drilling and to build a 640-kilometer pipeline to channel gas from the area to the city state.

"Premier alone will invest US$300 million," Spiers said.

He did not reveal the investments of the other contractors: Conoco Inc., a subsidiary of U.S. chemicals maker Du Pont Co., Canada's Gulf Resources Ltd.

The three contractors are to supply natural gas to Singapore's Sembawang Gas (SembGas) for 22 years starting from 2001. The gas will be used for the country's power and petrochemical plants.

Under the agreement signed last month with state oil and gas company Pertamina, SembGas will import 325 million cubic feet of natural gas per day or a total 2.7 trillion cubic feet (tcf) for 22 years through a subsea pipeline running from the gas fields in the South China Sea to Jurong (Sakra) island in Singapore.

According to Spiers, the three contractors had thus far found a reserve containing 2.1 tcf of natural gas in the area, 1 tcf of which was found by Premier.

The gas reserve is in three blocks: A Block, B Block and Kakap Block.

The area is called the West Natuna area to differentiate it from the eastern part of the islands which is more popular due to its huge gas reserves.

The East Natuna area reportedly contains gas reserves amounting to 44 trillion cubic feet, jointly owned by Esso (50 percent), Mobil (26 percent) and Pertamina (24 percent).

The government recently announced it had postponed the development of this gas reserve until 2007 due to weak regional demand.

Spiers said it was easier for Pertamina to market gas from the West Natuna area than the East Natuna area since the former had smaller reserves.

Aside from the Natuna area, Premier also is also exploring for oil and gas in the Pangkah area in East Java, and Halmahera. (jsk)