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)