Indonesia begins natural gas exports to Singapore from West Natuna
JAKARTA (JP): State-owned oil and gas company Pertamina said Wednesday that it and its production-sharing contractors had started sending natural gas to Singapore from the West Natuna area in the South China Sea.
Pertamina's director of production-sharing contractor (PSC) management Iin Arifin Takhyan told reporters that the development of all facilities for gas delivery from West Natuna to Singapore, including a giant underwater pipeline linking both areas, had been completed last month.
"The first gas arrived in Singapore on Jan. 3," Iin said, adding that the gas delivery was four months ahead of schedule.
He said a ceremony would be held in Singapore on Jan. 15 to mark the start of gas deliveries.
It was Indonesia's first gas export to Singapore as well as the first gas export via pipeline for Indonesia, which is known as a liquefied natural gas (LNG) exporter, Iin said.
Under the contract signed by Pertamina and Singapore's gas trading firm SembCorp Gas in January 1999, Pertamina and its production-sharing contractors will send 325 million cubic feet per day (MMCFD) of natural gas to Singapore through a 656- kilometer-long underwater pipeline.
The production-sharing contractors, grouped in the West Natuna Gas Consortium, are Conoco Indonesia, a subsidiary of American energy firm Conoco Inc., Gulf Indonesia Resources, a subsidiary of Canadian firm Gulf Canada Resources, and British-based Premier Oil.
The gas sales contract will generate revenue of between US$6 billion to $7 billion for the Indonesian government throughout the 22 years of the contract, Iin said at a press conference also attended by the management of the three contractors.
The development of the project initially caused controversy mainly because the bidding for the pipeline construction contract was won by American construction firm McDermott, which was accused of having links to former president Soeharto's golfing partner Mohammad "Bob" Hasan.
But Pertamina stuck to the selection of McDermott as the pipeline contractor, despite strong pressure from many legislators to review the results of the bidding.
"The production-sharing contractors have taken a courageous step in joining hands and building the West Natuna pipeline," Iin said.
The consortium has invested some $400 million for the construction of the pipeline alone. The pipeline is now being operated by consortium leader Conoco on behalf of the PSCs.
According to Iin, the West Natuna pipeline, billed as one of the longest in the world, has a capacity of 700 MMCFD, and can be upgraded to 1 BCFD in the future.
In total, the West Natuna Gas Consortium is committed to investing $1.5 billion for the project, $1.15 billion of which had been spent to get the project started.
The gas will be delivered to Jurong island in Singapore, where Singapore has built a multi-billion-dollar giant petrochemical and power plant complex.
Separately Dow Jones news agency quoted SembCorp Gas' general manager as saying that the company had signed up 25 new customers for the gas supplies from West Natuna.
SembCorp Gas' new customers bring the total contracted sales to Singapore users to 325 MMCFD, with the full contracted volume to flow in the first quarter of 2002. By July this year, the daily imports will be 130 MMCFD, Gomez said.
President of Premier Oil Indonesia Robin Allan hailed the project as a landmark project for Indonesia that also attracted worldwide attention.
"We have an incredible project and an incredible team. You haven't heard the last of the project. We're exploring for more gas with the help of Pertamina," Allan said.
Aside from West Natuna, Pertamina is negotiating with another Singaporean firm Singapore Gas Supply Pte. Ltd. for a contract to supply gas from central Sumatra to Singapore through the island of Batam.
Pertamina has also signed an initial agreement with Malaysian state oil and gas company Petronas for the supply of 250 MMCFD of gas to Malaysia from Conoco's Block B field in West Natuna. The gas will be first delivered to Petronas's gas facilities on Duyong island off Malaysia, from where it will be passed to the Malaysian mainland.
President of Conoco Indonesia Pat Mayer said Pertamina and Conoco proposed to connect the West Natuna-Singapore gas pipeline with the planned gas pipeline linking the Block B field in West Natuna to Duyong.
But, thus far Petronas favored building a separate pipeline, he said, adding that both parties were still negotiating to choose one of the two options.
Mayer said that both options would require the same investment of less than $40 million.
Allen said Premier was also interested in selling gas to Malaysia from its Block A gas field in West Natuna, adding that Petronas had expressed interest in buying a significant amount from it. (bkm)