Contracts for Natuna gas fields to be extended
Contracts for Natuna gas fields to be extended
JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto said the government would extend production sharing
contracts (PSCs) on gas fields west of Natuna island to allow
contractors to earn more revenue from the sale of gas to
Singapore.
Kuntoro said the ministry had asked President B.J. Habibie to
approve an extension to the three contracts for exploitation
rights to gas in fields west of Natuna island in the South China
Sea held by Britain's Premier Oil, Conoco of the United States
and Canada's Gulf Resources.
"The contracts will be extended to cover the whole period of
gas sales as requested by the contractors," Kuntoro said in a
weekly press conference.
The three companies asked the government to extend their
contracts as a condition for their participation in the final gas
sale agreements that will be signed by state oil and gas company
Pertamina and Sembawang Gas (SembGas) later this month.
Pertamina signed a preliminary gas sales agreement last July
to supply SembGas with natural gas extracted from the West Natuna
fields for 22 years from 2001 to 2023.
Gulf's contract on the Kakap block currently expires in 2005,
while Premier's contract on the A Block and Conoco's contract on
the B block will end in 2009 and 2018 respectively.
The contractors have asked the government to extend their
contracts to cover the whole period of gas sales.
Under production sharing contracts (PSC), the government has
the right to extend contracts after 30 years or transfer the
development of oil and gas fields to Pertamina.
The contractors claim that they will invest US$1.5 billion to
develop the gas fields and transportation facilities, including a
640 kilometer pipeline costing $400 million to carry gas from
West Natuna to the island of Jurong off Singapore.
SembGas will use the gas to feed power and petrochemicals
plants.
The gas will be the first Indonesia has exported through a
pipeline. Indonesia is currently the world's largest exporter of
liquefied natural gas (LNG). Most exports are directed toward
South Korea, Japan and Taiwan.
Sale of the West Natuna gas will reportedly generate total
revenue of $7.5 billion over 22 years, $2.4 billion of which --
or $180 million per year -- will go to the government in taxes
and profit sharing. (jsk)