Govt prioritizes ARCO's LNG project in Irian Jaya

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto said the government was prioritizing the development of the Tangguh liquefied natural gas (LNG) project in Irian Jaya over other LNG projects across the country.

Kuntoro said the government had instructed state oil and gas company Pertamina to prioritize marketing the gas to be produced by American energy company Atlantic Richfield Company (ARCO) and British Gas at the Tangguh LNG plant.

"The Tangguh LNG project has top priority. Other projects, including the development of Train I (ninth) at the Badak LNG plant in East Kalimantan and the East Natuna LNG project, should be shelved for the moment," Kuntoro told The Jakarta Post on Friday.

The Tangguh LNG plant will be fed with natural gas from three production-sharing blocks -- the Muturi block operated by British Gas and the Wiriagar and Muturi blocks operated by ARCO.

The three blocks reportedly have combined proven and probable gas reserves of 18.3 trillion cubic feet (tcf) with additional potential gas reserves of 3.9 tcf.

ARCO claims the blocks contain very clean gas.

The Tangguh LNG plant project, if realized, will become the country's third LNG center after the Badak LNG plant in Bontang and the Arun LNG plant in Aceh.

The East Natuna LNG project, also known as the D-Alpha LNG project, is 50 percent owned by American energy company Mobil Corp., 26 percent by Esso, also from America, with the remaining 24 percent held by Pertamina.

Mobil and Esso recently merged into Exxon Mobil Corp.

The East Natuna LNG project will be fed with natural gas from the D-Alpha block located east of the Natuna islands in the Southeast China Sea, where Mobil and Esso have reportedly found 42 tcf of natural gas.

However, the D-Alpha block contains gas with a high carbon dioxide (CO2) content which must be separated before the gas can be sold, a process which will drive the price of the gas beyond the price of gas from other fields.

President B.J. Habibie decided last year to delay the project due to the regional economic turmoil.

But the head of the government-commissioned Natuna Gas Development Project Team, Faisal Abda'oe, announced early this year that his team had resumed marketing gas from the D-Alpha LNG plant, following the discovery by Mobil of a technology to reduce the cost of extracting gas from the D-Alpha block.

Informed sources said PT Badak NGL Co, which is owned by French company Total Indonesie, American companies Vico and Unocal and Pertamina, had also planned to develop its ninth LNG train, or Train I.

The company has lobbied Pertamina to market the gas from the planned ninth train.(jsk)