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)