Indonesia expects $1 billion in new gas contracts

Indonesia expects $1 billion in new gas contracts

JAKARTA (JP): Indonesia is expecting an annual income of more
than US$1 billion from three new gas contracts with Malaysia and
Singapore, according to Minister of Energy and Mineral Resources
Purnomo Yusgiantoro.

Purnomo said on Wednesday that Indonesia would sell gas to
Singapore under two separate contracts with an annual value of
$775 million, and to Malaysia under a third contract worth
between $200 million and $300 million.

"We are finalizing negotiations with Malaysia to supply them
gas from the Natuna fields," Purnomo told reporters in a press
meeting.

He was referring to a recently signed head agreement between
state oil and gas company Pertamina and its Malaysian counterpart
Petronas.

Indonesia, he said, could reap a revenue of between $200 and
$300 million a year for the supply of 325 million cubic feet per
day (mmfcd) of gas over a period of 20 years.

Pertamina and its contractor, American oil and gas company
Conoco, will supply the gas from the West Natuna Islands located
in the South China Sea.

Conoco estimated the investment costs to be less than $1.5
billion.

Pertamina has also signed a head agreement with the
Singaporean firm Gas Supply Private Limited for the supply of gas
from Sumatra to Singapore.

Purnomo said that under the agreement, Indonesia would earn
some $400 million a year for the supply of 350 mmfcd of gas over
a period of 20 years starting from 2003.

Gas will be piped from the gas fields in Central South
Sumatra, where Pertamina's three production sharing partners
namely Gulf Resources Indonesia Grissik, Santa Fe Energy
Resources Jabung and Gulf Indonesia Resources South Jambi are
operating.

Pertamina and its contractors are expecting to invest around
$1 billion for the development of this project.

In 1999, a consortium of Pertamina, Conoco, Premier Oil Natuna
Sea Limited and Gulf Resources Limited signed a 22-year contract
with Sembawang Gas of Singapore.

Under the contract, the consortium will supply 325 mmfcd of
gas worth $375 million a year to Sembawang from the West Natuna
Islands, Purnomo said.

Purnomo said he expected President Abdurrahman Wahid to
inaugurate the project next month, which would mark Indonesia's
first gas export through pipelines.

Furthermore, he said, Pertamina was also bidding to supply
Taiwan with liquefied natural gas (LNG) from the Bontang LNG
plant in East Kalimantan.

"We're currently preparing to construct a new LNG processing
unit (Train I) at Bontang," he said.

Bontang has the country's largest LNG plant with a production
capacity of 27.2 million tons a year. Train I, if completed,
would become the plant's ninth LNG train.

Purnomo further said that the government planned to offer
incentives for domestic gas sales to various industries next
year.

"We hope to lower the gas prices, especially for the
transportation sector," he said, adding that it was to promote
the development and usage of gas fueled vehicles.

However, he did not elaborate by how much the government
planned to lower gas prices in the various industries.

According to him, prices of gas will be lowered for the
financially strapped state electricity company PT PLN.

PLN has long complained about the high gas prices it pays
compared to other strategic industries such as the fertilizer
industry.(bkm)