Nova Sumatra to operate gas pipeline in Sumatra

Nova Sumatra to operate gas pipeline in Sumatra

SINGAPORE (Dow Jones): Nova Gas International Ltd., a wholly owned unit of Canada's Nova Corp. has won a contract to operate and maintain a natural gas pipeline currently under construction in Sumatra by Indonesian state gas utility PT Perusahaan Gas Negara.

Payment for the two-year contract will be in both local and foreign currency, at Rp 6.2 billion plus US$2.26 million, NGI said in a public statement this week.

The contract is for a 544-kilometer, 28-inch-diameter pipeline from Gresik in southern Sumatra to Duri in central Sumatra.

The pipeline will carry gas from the Corridor block gas fields operated by Gulf Indonesia Resources Ltd. (GRL) to the Duri oil fields operated by PT Caltex Pacific Indonesia, a joint venture between Chevron Corp. (CHV) and Texaco Inc. (TX).

Among other services, NGI will operate and maintain the pipeline, train PGN staff and transfer technology for handover of operations to PGN after two years.

The Corridor block gas pipeline is expected to begin operation in the third quarter of 1998, carrying an initial 80 million cubic feet a day of gas and building up to about 310 mcfd around December, officials close to the project say.

Corridor block gas will be used at Duri to replace crude now burned to make steam that's injected into aging oil fields for enhanced oil recovery. By the end of the year, it's expected to free up about 51,000 barrels a day of Duri crude.