Pertamina, Petronas sign US$6.2b gas deal
Pertamina, Petronas sign US$6.2b gas deal
JAKARTA (JP): State oil and gas company Pertamina signed on
Wednesday a US$6.2 billion deal with Malaysian state oil and gas
firm Petronas Bhd for the supply of natural gas from the West
Natuna area in the South China Sea to Malaysia.
Under the deal, Pertamina will supply Petronas with a total of
1.5 trillion cubic feet of natural gas for 20 years from gas
fields owned by Pertamina's production sharing contractor Conoco
Indonesia Inc., which is the Indonesian subsidiary of American
oil and gas giant Conoco Inc.
The contract was signed by Pertamina's president Baihaki Hakim
and president and chief executive officer (CEO) of Petronas
Mohammad Hassan Marican.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
and Malaysia's Minister of Energy, Communications and Multimedia
Datuk Amar Leo Moggie and Conoco Indonesia's president and
general manager Patrick L. Meyer witnessed the signing of the
agreement.
"This deal and other previous gas deals signed by Pertamina
will help speed up the country's economic recovery," Purnomo said
in his speech.
He said Indonesia will earn a total of US$6.2 billion in
revenue from the gas supplies to Malaysia throughout the 20-year
contractual period.
It is the third contract for gas supplies through pipeline
signed by Pertamina with foreign buyers after the first contract
with Singaporean firm Sembawang Gas, which was signed in early
1999, and the second contract with Singapore's firm Singapore
Power, which was signed last February.
Indonesia is already known as the world's largest liquefied
natural gas (LNG) producer.
Conoco is also involved in the gas contract with Sembawang Gas
as gas supplier together with British firm Premier Oil and
Canadian firm Gulf Resources.
Under Wednesday's contract, Conoco will send the gas from the
Block B contract area, which is also known as the Belanak block,
to the Duyong gas offshore facilities owned by Petronas through
subsea pipelines.
Block B, which is also one of the sources for the gas supplies
to Sembawang, is 40 percent owned by Conoco in partnership with
Japanese firm Inpex (35 percent) and American firm Texaco (25
percent)
The first gas delivery is expected to arrive in Duyong on July
28, 2002.
The gas supplies will be sent at the rate of 100 million cubic
feet of gas per day (MMCFD) in the first two years but the amount
of the gas will be gradually increased to 250 MMCFD by 2004.
From Duyong, the gas will be delivered to Malaysia's mainland
to meet the country's gas needs.
Baihaki said Conoco and partners would spend US$3.9 billion to
develop Block B in line with the contracts with Petronas and
Sembawang.
The $3.9 billion development project includes the
construction of major production platforms, a 96 kilometer-long
subsea pipeline, a floating, production, storage, and off-take
(FPSO) vessel and liquefied petroleum gas (LPG) facility.
Conoco will also produce 100 million barrels of oil and 100
million barrels of liquefied petroleum gas (LPG) at Block B,
according to Baihaki.
Mohammad said the deal would strengthen the relations between
Petronas and Pertamina and the bilateral relations between
Malaysia and Indonesia.
"The conclusion of this agreement is another milestone in the
relationship between Pertamina and Petronas ... (and) will
enhance the bilateral relations between Indonesia and Malaysia,"
Mohammad said.
He also said the underwater pipeline to be built by Conoco to
transmit gas from West Natuna and Duyong could become one of the
foundations for the development of the so-named Trans ASEAN-Gas
Grid in the future.
Malaysia is one of the countries aggressively promoting the
development of a gas network linking all the countries with the
Association of South East Asian Nations (ASEAN). (03)