Malaysia buys 40 percent of PT PGN

Malaysia buys 40 percent of PT PGN

The Jakarta Post, Jakarta

Trans Asia Pipeline Co., a consortium led Malaysia's Petroliam Nasional Bhd., has bought a stake in a unit of state-owned gas distribution and marketing company PT Perusahaan Gas Negara (PGN) for US$187.6 million.

Under the deal signed here Thursday, Trans Asia bought a 40 percent stake in PT Transgasindo or Transco I, which will develop a pipeline from South Sumatra to Singapore to deliver about US$9 billion worth of gas over 22 years to Singapore starting in 2003.

Aside from Petronas, Trans Asia shareholders are Singapore Petroleum Co., Talisman Transgasindo and Conoco Indonesia Holding.

The gas will be extracted from several fields in the central and southern part of Sumatra, including the Corridor Block PSC which is operated by Canadian firm Gulf Resources Indonesia, which was last year bought by Conoco.

The Sumatra-Singapore gas delivery was signed in February last year.

Funds raised from the stake sale will make up a US$250 million shortfall in financing for the $477 million pipeline project slated for completion in August 2003, according to Dow Jones Newswire.

The construction of the pipeline will be partially financed by the Asian Development Bank, which has committed US$88 million in loans to PGN, contingent upon the Transco I stake sale.

Trans Asia Pipeline's keenest contender for the stake in Transco I had been Korea Gas Corp. together with U.S. investment firm AIDEC Management Co.