Joint venture buys 40% stake in PGN's subsidiary

Joint venture buys 40% stake in PGN's subsidiary

Agencies, Singapore/Kuala Lumpur

Joint-venture company, Transasia Pipeline Co., has completed a deal to buy a 40 percent stake in Transgasindo, a unit of Indonesian gas transmission company, PT Perusahan Gas Negara, or PGN, ConocoPhillips said Tuesday.

ConocoPhillips is part of the consortium comprising Malaysia's Petronas, Singapore Petroleum Co., Talisman Energy Inc. that makes up Transasia.

Transasia entered an agreement with PGN in September to buy 40 percent of Transgasindo shares.

The stake will cost $187.6 million, which includes a commitment to contribute $57.6 million in new equity to assist in financing a South Sumatra-Singapore gas pipeline, ConocoPhillips said in a statement.

Transasia is a consortium set up in Mauritius involving Petronas Int. Corp. with 35 percent interest, CONOCO Indonesia Holdings 35 percent, SPC Indo-Pipeline Co. 15 percent and Talisman Transgasindo Ltd. 15 percent.

Currently under construction by PGN, the Grissik-Batam- Singapore pipeline will be transferred to unit company, Transgasindo on completion in late 2003 at a fixed price.

The 468 kilometer onshore and offshore Singapore pipeline will, when completed, transport natural gas from Sumatra to Singapore at an initial maximum rate of 350 million standard cubic feet a day of gas.

Transgasindo assets include the existing Grissik-Duri pipeline, which runs from the Corridor Block gas plant operated by a unit of ConocoPhillips to the Duri oil field in Riau. Caltex, a unit of ChevronTexaco Corp., uses gas to facilitate its Duri oil production.

Transgasindo's new boards of commissioners and directors will each include two representatives from Transasia - to be nominated by ConocoPhillips and Petronas for an initial four years, ConocoPhillips' statement noted.

"We are looking forward to expanding Transgasindo's pipeline system to meet the demands of the domestic and international markets, and integrating it into the Trans ASEAN Gas Pipeline network," said Paul Warwick, president of ConocoPhillips' Indonesian unit.

Separately Petronas said the deal marked its entry into the gas transportation business in Indonesia and signified an important move by the company to diversify and expand its business portfolio in Indonesia.

Petronas' other activities in Indonesia include upstream business and oil trading.

Petronas said the pipelines would provide additional linkages towards an integrated cross-border gas infrastructure in Southeast Asia, and was a step forward towards realizing the $7- billion Trans-ASEAN Gas Pipeline (TAGP) network.

It said Malaysia currently has the most developed and extensive gas infrastructure in the region and was well- positioned to become the backbone of the TAGP network.

The 4,000-kilometer (2,500 mile) TAGP project is aimed at ensuring a secure supply of natural gas among ASEAN members and providing competitive incentives to their producers.

ASEAN in July said it would set up a gas consultative council to study the regulatory and institutional frameworks for cross- border supply, transportation and distribution of natural gas in the region.