Pertamina, Esso to sign deal on LNG projects
Pertamina, Esso to sign deal on LNG projects
JAKARTA (JP): The state oil company Pertamina and Esso Natuna
Inc., an affiliate of the U.S. Exxon Corp., are expected to sign
an agreement on a US$34 billion natural gas liquefaction project
in the Natuna Sea by the end of this year.
"We are in the final negotiations with Esso to develop the gas
liquefaction project in Natuna, hoping that the deal will be
signed soon after the clarification of some items in the planned
agreement later this year," Pertamina's president Faisal Abda'oe
told Commission VI of the House of Representatives (DPR) in a
hearing here yesterday.
State Minister of Research and Technology B.J. Habibie, who is
also a supervisor of the Natuna project, assured early this month
that the Pertamina-Esso deal will be signed in November.
There are still some differences on the 52-item Basic
Agreement for the long-term Natuna project emerging between the
two parties, said Abda'oe, who is also chairman of the project's
negotiating team.
He did not elaborate on the points of disagreement, but a
member of the commission, Iskandar Mandji, said that exclusive
protection from the government asked by Esso, the tax tariff, as
well as Esso's royalty to Pertamina, remained sticking points.
Abda'oe explained that the negotiations with Esso consumed a
great deal of time because the project is very complex and
complicated.
Content
Abda'oe reminded his listeners that the gas output from the
Natuna field has a high level of carbon dioxide content,
amounting to 71 percent. The content may cause a serious
pollution problem, once it is thrown into the sea.
"As an alternative, the carbon dioxide form the Natuna field
should be injected back into the earth, he said.
Esso has reportedly invested some $16 billion for the initial
development of the gas field in the Natuna bloc, billed to be the
largest concentration of gas reserves in the world.
Platforms
The natural gas project will have six treating platforms, six
drilling platforms (each with 36 wells), two living quarters
platforms and four injection platforms.
The treating platforms are expected to be capable of the bulk
extraction of carbon dioxide.
The Natuna field, operated by Esso under a production sharing
contract with Pertamina since 1980, is located about 1,100
kilometers north of Jakarta and 600 kilometers northeast of
Singapore at 145 meters depth.
Both parties have agreed to hold a 50-percent share in the gas
liquefaction project, Abda'oe said.
"Regardless of the disagreement, we expect that the Natuna
project will start its initial commercial operations by 2004,"
Abda'oe said, adding that the construction of the project will
take eight years.
He said he expected the construction to start as soon as the
agreement is signed.
Upon project completion, the Natuna field will produce up to
14 million tons of liquefied natural gas (LNG) per year, he said.
In comparison, the LNG plants in Arun, North Sumatra, and in
Bontang, East Kalimantan, are capable of producing 25 million
tons of LNG per year.
An Esso survey showed that gas deposits in Natuna reach some
45 trillion cubic feet.
"We expect that the production of the Natural field will
anticipate the increasing demand for energy in the country," he
said, cautioning that Indonesia will likely become a net oil
importer in the early 2000s.
Director general of Oil and Gas Suyitno Patmosukismo said
yesterday that Indonesia will become a net oil importer within
the next 10 years, considering that the oil demand in the country
is rapidly increasing, while its oil reserves are being depleted.
(fhp)