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)