Natuna gas pipeline contracts pending

Natuna gas pipeline contracts pending

JAKARTA (JP): Contracts for the development of the 640-
kilometer subsea gas pipeline which will be used to transmit
natural gas from the western part of Natuna Islands to Singapore
will be awarded in November, a Singapore's official said here
yesterday.

"We hope to award the contracts as soon as possible. The
sooner we award the contracts, the sooner we can start
construction and the sooner we can start to receive a supply of
gas," the chairman of Singapore's Economic Development Board
(EDB), Philip Yeo, said after an hour-long meeting with President
B.J. Habibie.

Yeo said eight international consortia have bid for the
construction contract, but he declined to mention which companies
were involved.

Britain's Premier Oil, the main contractor in the West Natuna
gas field, has estimated that the pipeline development will
require a $1 billion investment.

State oil and gas company Pertamina signed a US$8 billion gas
supply contract with Singapore's Sembawang Gas (SembGas) in July
under which Indonesia will supply the island state with natural
gas from the West Natuna field, which lies in the South China
Sea, for 22 years beginning in 2001. The gas will be transported
via the pipeline.

Pertamina will supply Singapore with 325 million cubic feet
per day over a 22-year period of natural gas worth about $8
billion to the Jurong island in Singapore.

The gas will be used by power generation companies and
petroleum and chemical manufacturing companies for co-generation
and fuel oil replacement.

SembGas is a consortium led by Sembawang Engineering and
Construction and includes Tuas Power, Tractebel SA of Belgium and
EDB Investments Pte Ltd.

Major users of the West Natuna gas include the proposed 1,200
Megawatt (MW) stage A II power plant in Tuas which is owned by
Singapore's Tuas Group Pte Ltd, and the proposed 800 MW co-
generation plant on Jurong island, which is owned by Sembawang
Utilities and Terminals.

The West Natuna gas field, which contains gas reserves of 2.75
trillion cubic feet, is being developed by Conoco Inc -- a
subsidiary of U.S. chemicals maker Du Pont Co. -- Canada's Gulf
Resources Ltd and Britain's Premier Oil Natuna Sea Ltd, all of
which have entered into a production sharing contract arrangement
with Pertamina.

Under the production sharing contract, Pertamina will receive
65 percent of the net profit from the sale of the natural gas and
the remaining 35 percent will be split between the contractors.

The West Natuna gas field is distinct from the field in the
eastern part of the island, which is one of the world's largest,
with estimated gas reserves of 44 trillion cubic feet.

No buyers have yet been found for the gas extracted from the
giant East Natuna field, which is owned by Esso, Mobil and
Pertamina.

"The West Natuna gas project will benefit both Indonesia and
Singapore. For Singapore, it will help us to further develop our
power generating capabilities in a cleaner and more efficient
way. For Indonesia, this is an important project that will
position it for long term growth and prosperity," Yeo told
reporters in July after a ceremony to sign the gas supply
contract.

Yeo said yesterday that he considered Habibie to be a friend,
adding that they had worked closely together on a number of Batam
island projects. Batam island lies to the south of Singapore and
is where many Singaporean investments in Indonesia are located.

Habibie has in the past chaired the Batam Industrial
Authority. (jsk)