Natuna gas purchase talks on track, says Thai PTT

Natuna gas purchase talks on track, says Thai PTT

SINGAPORE (Reuter): State-owned Petroleum Authority of
Thailand (PTT) said yesterday the recent baht fall has not
affected its talks with Indonesia to buy Natuna natural gas and
is on track to conclude a deal by end November.

"We are on track for the conclusion (of a sales and purchase
agreement) by November," said a PTT official involved in the
talks with Indonesia's state-owned Pertamina.

"We need another three to four meetings to conclude the main
points. The devaluation will not affect the supply plan."

Under a memorandum of understanding (MOU) sealed in Bangkok on
May 8 and approved by Indonesia's President Soeharto four days
later, Indonesia will give PTT an 11-percent stake in the Natuna
gas field subject to PTT's agreement to buy the gas.

The sales and purchase agreement should be concluded by the
end of November or at a later date as mutually agreed by the two
parties.

Under the MOU, PTT will purchase gas from the Natuna field as
early as 2003 with volumes reaching 500 million cubic feet per
day from 2005 and one billion cubic feet by 2007.

PTT affiliate, PTT Exploration and Production Plc (PTTEP) was
given an option to take a stake in the upstream activities in the
Natuna field.

Following the flotation of the baht last Wednesday, the
currency plunged 20 percent on the offshore markets and it was
last quoted at 29.03/29.13 to the dollar.

The battered baht led to speculation that PTT might review its
negotiations to buy gas from Indonesia as well as the offer to
take up a stake in the Natuna project.

The PTT official said even though the Bank of Thailand
forecast that the country's economy will slow down this year, in
the long run growth will continue to be healthy to sustain a high
demand for gas for the power sector.

He said as more power plants switch from fuel oil, demand for
natural gas is expected to rise from the current 1.5 billion
cubic feet per day to 4.5 billion cubic feet by 2011.

The natural gas from Natuna would be important if PTT won the
round of biddings in 2004 to supply feedstock to the
international power plants, he said.

A senior PTTEP official also said the terms of the MOU has not
changed and the upstream division will participate in talks to
take up a stake in the project as soon as the sales and purchase
agreement is concluded.

Pertamina now has a a 24-percent stake in the Natuna gas
project with Mobil Corp holding 26 percent and Exxon Corp 50
percent.

The Natuna field in the South China Sea is one of the largest
gas fields in the world, with an estimated 222 trillion cubic
feet (TCF) of gas, of which 46 TCF are commercially recoverable.

The cost of the development has been estimated at $40 billion.