Gulf agrees to send more gas to Caltex

JAKARTA (JP): Gulf Indonesia Resources Limited, in which Gulf Canada Resources Limited holds a 72 percent stake, said on Tuesday it and its partners reached an agreement in principle for additional gas deliveries to PT Caltex Pacific Indonesia.

Gulf said in a press release the gas would be delivered from the Corridor Block in South Sumatra to the Duri oil field owned by Caltex in Central Sumatra.

The Corridor Block is 54 percent owned by Gulf, 36 percent by Talisman (Corridor) Ltd, a wholly owned subsidiary of Talisman Energy Inc., with the remainder held by state oil and gas company Pertamina.

The terms of the agreement include a contract quantity of 1.1 trillion cubic feet (TCF) of gas to be delivered over 20 years and exchanged for Duri crude oil, Gulf said.

Gas deliveries are expected to commence in 2002 at 90 million cubic feet per day (MMCFD), increasing to 180 MMCFD by mid-2003, it added.

The statement said the natural gas would be delivered after the installation of compression facilities through the existing 544-kilometer Grissik to Duri pipeline owned and operated by state gas distribution company PT Perusahaan Gas Negara (PGN).

"Detailed agreements are now being finalized with execution targeted for late in the fourth quarter," it said.

The agreements will be subject to approval by Pertamina, PGN and the respective shareholders of Caltex and the Corridor Block PSC participants.

Gas supplied under the new contract will supplement the gas that is currently being delivered from the Corridor Block PSC to the Duri Steamflood operations at rates of about 300 MMCFD, the company said.

Contract quantities under this initial agreement with Caltex will decline to 245 MMCFD in mid-2003. Total combined gas deliveries under both contracts are expected to be 425 MMCFD by 2003.

"This is a great deal for all parties and further strengthens the role of natural gas as a strategic resource for Indonesia," Gulf Indonesia president and chief executive officer Bill Fanagan said in the statement.

"Importantly, the deal will allow additional Indonesian crude oil exports in the future, thus providing increased foreign exchange earnings for the country," Fanagan added. (jsk)