Natuna deal signing next week: Abda'oe
Natuna deal signing next week: Abda'oe
JAKARTA (JP): The Indonesian government, indicating that it will soon start developing the biggest project ever in the country's history, said yesterday that it will sign an agreement with Exxon Corp. of the United States next week for gas liquefaction in Natuna.
Faisal Abda'oe, the president of the state oil company Pertamina, told reporters here that the agreement on the US$35 billion project will be signed next Monday.
He declined to elaborate on the deal or on the production and profit sharing arrangements.
He said, however, that Exxon and Pertamina would divide the investment capital required for the development of the natural gas project on a 50-50 basis.
The Natuna deal has been in limbo for two years due to conflicting opinions over profit sharing, government guarantees and taxes.
Earlier news report said that Exxon needed special tax incentives to make the project feasible.
Indonesia has passed new tax laws, made effective this month, that warrant certain benefits for the project.
One of the new laws stipulates that foreign investments in frontier areas are eligible for tax privileges, including the right to carry forward losses for up to 10 years and the reduction of the 20 percent withholding tax on after-tax profits of permanent establishments in Indonesia.
On the tax issue, Abda'oe commented yesterday: "Actually, the negotiations had been completed in November but the results were still subject to the new tax law which became effective this month."
Preparations on the agreement were signed here on Nov. 10 with U.S. Commerce Secretary Ron Brown, Indonesian State Minister for Research and Technology B.J. Habibie and 10 other Indonesian ministers witnessing.
The project is located about 1,110 kilometers north of here and about 600 kilometers northeast of Singapore. The seabed around the Natuna island is estimated to have 210 trillion cubic feet of gas reserves.
Early studies of the project estimate that out of the reserves, about 38 million tons of liquefied natural gas can be produced annually for about 20 years.
Participation
Abda'oe also said yesterday that Pertamina was seeking to release part of its stake in the historic deal. "We do not want to retain all of the 50 percent. We want others to participate," he said.
The executive cited that several producers, buyers and financiers had already expressed interests, but he said that any decision will have to wait for the signing.
Studies of the project expect that 18 offshore platforms will be constructed to treat the more than 10 billion cubic feet of gas each day.
The studies also estimate that the offshore facilities will include 70,000 tons of structural steel, 910 kilometers of pipelines and 2.6 million horsepower of turbo machinery.
Even without Natuna, Indonesia -- with an annual production capacity of over 23 million tons -- is the biggest producer of liquefied natural gas (LNG) in the world. All of the LNG is exported to Japan, Taiwan and South Korea.(hdj)