Indonesia ready to export gas to Malaysia
A'an Suryana, The Jakarta Post, Jakarta
State-owned oil and gas company Pertamina and its American production-sharing contractor Conoco Indonesia Inc. are set to start sending natural gas to Malaysia from the West Natuna area in the South China Sea area in August.
It will be Indonesia's first gas export to Malaysia, which will be transported through an undersea pipeline.
Conoco completed this month the construction of all facilities for gas delivery, including a giant underwater pipeline linking both the Indonesian and Malaysian areas.
"The project will generate revenue amounting to US$2.9 billion for the Indonesian government," said Effendi Situmorang, Pertamina's director for production-sharing management, told a press conference on Wednesday.
The ceremony marking the first gas delivery will be held at Conoco's production site in West Natuna on Aug. 8.
The project dates back to 1999, when Pertamina and Malaysian state oil and gas firm Petronas agreed to develop the project.
Later on, in March 2001, both sides signed a deal, under which Pertamina would supply Petronas with a total of 1.5 trillion cubic feet of natural gas worth $6.2 billion for 20 years from the West Natuna area.
The gas will be supplied from the Block B concession, which is also called the Belanak Block, to the Duyong gas offshore facilities owned by Petronas in Malaysia waters, through 96 kilometers of undersea pipelines. The Belanak Block is co-owned and operated by Conoco with partners including Canadian firm Gulf Indonesia Resources, Japanese firm Inpex and American firm Texaco.
Conoco and its partners have invested some $2.5 billion to build all the facilities for the gas export.
Of the $6.2 billion from the gas sale, the Indonesian government will receive $2.9 billion, according to Effendi.
In the first delivery in August, the gas supply will amount to 100 million standard cubic feet per day (mmcfd), but the volume is expected to increase to 250 mmcfd by the year 2007, under the 20 year contract.
Conoco's president and general manager Patrick L. Meyer said that the company had completed the construction of the project on time, before the August deadline.
"We are now ready to deliver the gas to Malaysian waters," he told reporters at the press conference.
Indonesian is a big player in the gas industry in the Asia Pacific, exporting about 28 million tons of liquefied natural gas (LNG) per year to Japan, South Korea and Taiwan.
While Indonesia has been exporting LNG for decades, it only recently started exporting gas through pipelines.
The planned gas export to Malaysia is the third contract for piped gas supplies between Pertamina and foreign buyers. The first contract was signed with Singaporean firm Sembawang Gas in early 1999, while the second contract was signed with Singapore Power in February 2001.
Indonesia started sending gas to Singapore from West Natuna in Jan. 2001, while another project that will deliver gas from Sumatra to Singapore has yet to be realized.
According to government data, Indonesia has total gas reserves of more than 100 trillion cubic feet.