Pertamina signs gas deal with Petronas

JAKARTA (JP): State oil and gas company Pertamina signed on Thursday a "heads of agreement" with Malaysian state oil and gas company Petronas for the supply of natural gas from the West Natuna area in the South China Sea to Malaysia.

Pertamina's spokesman Ramli Djaafar said the agreement was signed by Pertamina's president Baihaki Hakim and Petronas' president Tan Sri Dato' Hasan Marican at Pertamina's headquarters.

He said under the 20-year contract, Pertamina would supply a total of 1.5 trillion cubic feet of natural gas to Petronas throughout the contractual period.

The gas will be extracted from the gas fields in the Block B contract area, owned by a consortium comprising of Conoco Inc. of the United States, which is the consortium's leader, Texaco, also of the U.S., and Inpex of Japan.

The gas will be piped to the Duyong platform owned by Petronas with the first gas expected to arrive in the platform in the middle of 2002.

He said the agreement was signed by Pertamina's president Baihaki Hakim and Petronas' Tan Sri Dato' Mohammad Hasan Marican in a ceremony closed to the press.

He said both parties had yet to sign a number of supporting agreements before they reach the final deal.

He said all the parties involved in the project had to spend a total investment of US$3.5 billion to build gas production facilities, and construct underwater pipelines between West Natuna to connect with the Duyong platform.

The gas supplies were expected to generate up to US$6.2 billion in total revenue throughout the contractual period or $310 million per year for the government.

The Malaysian gas deal will be the second gas deal to be signed by Pertamina for the supply of gas from the West Natuna area.

The state company has also signed a gas sales contract with Singapore's Sembawang Corp. for the supply of gas from the area to Singapore.

The gas to be sent to Malaysia will be extracted from the gas fields owned by Conoco, British company Premier Oil and Canadian firm Gulf Indonesia Resources.

The consortium of the three Pertamina contractors is building a 640-kilometer subsea pipeline stretching from West Natuna to Singapore.

Meanwhile, Petronas was quoted by Reuters as saying in a statement that it and Pertamina also signed a deal in the same ceremony allowing the former to refine the crude oil owned by Pertamina.

Under the six-month deal which will begin on November 1, this year, Petronas will refine 20,000 barrels of crude oil per day for Pertamina. (jsk)