Indonesia begins natural gas exports to Singapore from West Natuna

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)