Govt signs new gas contracts

Govt signs new gas contracts

Indra Harsaputra, Surabaya

The government signed US$4.3 billion worth of liquefied natural
gas (LNG) sales agreements with several international and local
oil and gas companies on Friday.

The Upstream Oil and Gas Implementing Body (BP Migas) said
that the agreements covered the sales of 1.7 trillion cubic feet
of natural gas.

State-owned gas distribution company PT Perusahaan Gas Negara
(PGN) is set to buy gas from ConocoPhilips and PT Medco Energi
Internasional to meet demands in West Java and Batam.

BP Plc. will sell gas to local fertilizer company PT Pupuk
Kujang, while Amerada Hess extended a gas sales contract with
chemical company PT Petrokimia Gresik.

With the signing of these contracts, BP Migas claimed that it
had managed to coordinate a total of 35 gas sales contracts
domestically within the last two years, with a total volume of
8.4 trillion cubic feet, valued at $22 billion.

Also on Friday, the government signed three Memorandum of
Understanding (MOU) agreements on LNG sales with three Chinese
companies: First China Petroleum, Sino-Cher, and China Chemical
Corp.

BP Migas chief Rachmat Sudibyo said that each company would
buy between 1 trillion to 3 trillion cubic feet of gas. No
further details were provided.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said that Indonesia had yet to manage its 140 trillion cubic feet
of gas reserves.

"We've just managed around 80 trillion cubic feet of natural
gas. The government will put in its best effort to boost
investment in the oil and gas sector," he said.

Indonesia is trying to increase its gas sales to China as BP
Plc.'s contract with China's Fujian province -- to sell 2.6
million metric tons of LNG per year from 2007 for 15 years -- is
considered not economical enough to support the development of
BP's Tangguh project in the West Papua province, analysts have
said.

Being the world's sixth largest natural gas producer,
Indonesia is also aiming to sell its LNG to new markets,
including the United States West Coast and Mexico.