Pertamina, Petronas sign initial pact on gas sales

JAKARTA (JP): State oil and gas company Pertamina has signed the initial agreement with Malaysian state oil and gas company Petronas which will allow Pertamina's contractor Conoco Inc. of the United States to supply natural gas to Malaysia for 20 years in a multibillion-dollar worth deal.

Conoco executive vice president Robert E. Mckee III said the gas for Malaysia would come solely from Conoco's Block B field in the West Natuna area of the South China Sea.

"We're very pleased to report that the negotiations have been completed on the second gas sales. It's going to go to Malaysia. We have the exclusive right to supply that gas out of Block B," Mckee said. He was accompanied by president and general manager of Conoco Indonesia Pat Meyer.

According to Mckee, Pertamina signed the initial agreement with Petronas on Wednesday.

"Over the next few months all the minor details will be worked out before the contract is actually signed," he added.

Aside from Malaysia, Conoco has also signed a contract to supply gas from West Natuna to Singapore through a consortium which also includes British oil and gas firm Premier Oil and Canadian oil and gas company Gulf Resources.

The consortium is developing a 640-kilometer underwater pipeline linking the West Natuna area with Singapore.

However, Conoco has been embroiled in a dispute with Premier over the former's plan to "use" the consortium's pipeline

Conoco reportedly planned to link the West Natuna-Singapore pipeline with its own pipeline that is to be build to transport the gas to Malaysia.

Premier objects to the plan and brought Conoco to an arbitration panel in London three months ago.

Mckee refused to make any comments on the arbitration.

Pertamina has assured that the dispute would not affect the planned gas sales to Malaysia.

Conoco said its Block B gas field has a total gas reserve of 1.5 trillion cubic feet, all of which would be consumed by Malaysia.

Mckee said under the planned Pertamina-Petronas deal, Conoco would supply Petronas with 250 million cubic feet of gas per day for 20 years starting from 2002.

He said the company would invest less than US$1.5 billion for the Malaysian gas project.

Pertamina has estimated that the government's revenue would reach between $7 billion to $10 billion throughout the contract period.

Mckee said that the company has additional gas reserves in Block B, outside those dedicated to Singapore and Malaysia, and was continuing gas exploration in the area.

"So we expect down the road we're going to have more gas reserves for a third or maybe fourth contract," he said. (bkm)