Pertamina, PGN sign gas pipeline contract

Pertamina, PGN sign gas pipeline contract

JAKARTA (JP): State oil and gas company Pertamina and several
production sharing contractors (PSC) agreed here on Friday to
cooperate with the state-owned PT Perusahaan Gas Negara (PGN) in
the transportation of gas from Jambi and South Sumatra to
Singapore.

Under the agreement, Pertamina contractors Gulf Resources
(Grissik) Ltd., Gulf Resources (South Jambi) Ltd. -- which are
both the subsidiaries of Canada's Gulf Resources -- and Santa Fe
Energy Resources Jabung Ltd. -- a unit of America's Santa Fe
Energy Resources Ltd. -- will use the 477-kilometer pipeline to
be built by PGN to transport gas from their production fields in
Jambi and South Sumatra via Batam island to Singapore's Power
Gas.

"This (gas transportation agreement) is one step in the effort
to realize our plan of exporting natural gas to our neighbor
Singapore," Minister of Mines and Energy Kuntoro Mangkusubroto
said in his speech after witnessing the signing ceremony.

Pertamina signed last year a memorandum of understanding to
supply Power Gas, a unit of Singapore Power, with natural gas
starting from 2001. The gas will be used to feed the island's
power plants.

Pertamina, Gulf and Santa Fe are preparing to strike another
deal with Power Gas in the near future.

Pertamina and its contractors also plan to distribute gas to
power plants and industries in Batam.

Under the gas transportation letter of agreement signed on
Friday, PGN will install 477 kilometers of gas pipeline, with a
diameter of 71 centimeters. The plans include a 282-km pipeline
from Sakernan in Jambi to Batam, a 60-km pipeline from Batam to
Singapore via Bulan island, and a 135-km pipeline from Grissik in
South Sumatra to Sakernan.

PGN has been operating a 544-km pipeline transporting gas from
Gulf's gas fields in Grissik to PT Caltex Pacific Indonesia's oil
fields in Duri, Riau.

The Grissik-Duri pipeline has a capacity of 310 million cubic
feet per day (MMCFD) of gas, while the new Sumatra-Singapore
pipeline will be designed to channel about 300 MMCFD of natural
gas.

The export of gas to Power Gas, if realized, will be
Indonesia's second gas export contract with Singapore.

Pertamina struck early this year a deal to supply Singapore's
Sembawang Corporation (SembCorp) with natural gas extracted from
fields west of the Natuna islands by Premier Oil of Britain, Gulf
Resources and America's Conoco.

The supply of gas from the South China Sea to Singapore is
also scheduled to start in 2001.

Kuntoro noted that aside from transporting gas from Sumatra to
Singapore, PGN's gas pipeline network was expected to spur
economic growth in Sumatra's east coast, including areas around
Jambi, Kuala Tungkal, Pekanbaru, Batam and Bintan, due to the
availability of natural gas as a clean and cheap fuel.

"As such, (the pipeline network) will attract foreign and
local investors to the area and the presence of the investors are
expected to increase the welfare of the local people," Kuntoro
said.

Kuntoro said PGN's pipeline will also encourage more investors
to explore for gas in Sumatra's east coast, as the problem of
transportation will have been solved.

PGN will build the pipeline with loans from the Asian
Development Bank, Japan Exim Bank and other international banks,
but the company did not reveal the amount of the loans. (jsk)