Korean Gas, Pertamina sign $3.34 billion LNG deal

JAKARTA (JP): State-owned oil company Pertamina signed on Saturday a new contract with Korean Gas Corporation worth US$3.34 billion to supply one million tons of liquefied natural gas (LNG) per year for 20 years starting in 1998.

"This is the third contract with South Korea and the shipment will start in 1998," Pertamina's president Faisal Abda'oe told reporters in Bali after signing the contract.

The first contract is for the shipment of two million tons per year from 1986 to 2006 and the second for the shipment of 2.3 million tons per year from 1994 to 2014.

"The LNG will be shipped from Train-H, the eighth production train at Pertamina's Bontang LNG plant in East Kalimantan which is currently under preparation for development" he was quoted by Antara as saying.

The supply to South Korea will be supported by new gas reserves discovered by Total Indonesie, Vico Indonesia and Unocal Indonesia, he said.

Pertamina currently operates six LNG trains in Bontang and another six in Arun Aceh, with a combined total production capacity of over 25 million tons per year.

Abda'oe said that the deal increased Pertamina's total export to South Korea from 600,000 tons in 1986 to five million tons this year and to seven million tons starting in 1999.

"South Korea is the biggest buyer after Japan. Taiwan follows as the third largest buyer," he added.

Earlier on Aug. 3, Pertamina signed two LNG contracts worth US$20.3 billion to supply eight Japanese gas and power firms for eight to 11 years.

The eight Japanese buyers are Kansai Electric Co., Nippon Steel Co., Chubu Electric Power, Osaka Gas Co., Toho Gas Co., Kyushu Electric Co., Jilco and Nissho Iwai.

Korean Gas President Han Kap So said that Korea's consumption of LNG which reached 6.7 million tons in 1986 would increase to 15 million tons by 2000, reflecting an annual rise of 30 percent.

Besides Indonesia, the LNG suppliers to South Korea include Australia, Middle East countries and Malaysia, he added.

Meanwhile, Pertamina's General Director Baharudin said that Indonesia will boost the development of the giant Natuna gas project to meet the increasing demand for LNG.

"Last week, we signed week a confidential agreement with Japanese investors about their commitment to the Natuna gas project," he said

The Japanese investors included such multinational companies as Mitsui Corp., Mitsubishi Corp., Kanematsu Corp., Nissho Iwai Corp., Toyo Menka Corp., Sumitomo Corp. and Itochu Corp., he said. (04)