Pertamina talks with Petronas over Natuna gas
JAKARTA (JP): State oil and gas company Pertamina said on Friday it was negotiating with its Malaysian counterpart, Petronas, on the possibility of supplying Malaysia with natural gas from the West Natuna gas field.
Pertamina president Martiono Hadianto said negotiations were still in the early stages, with the volume of gas Petronas would buy still to be discussed.
Martiono said talks with Petronas over the Natuna gas began last April when he visited Malaysia.
According to Martiono, since his visit, Pertamina and Petronas had talked about various other possible projects that could be jointly developed.
"We discussed creating stronger cooperation between Pertamina and Petronas," Martiono said.
The Natuna gas field is located in the Southeast China Sea and is being developed by a consortium that includes Premier Oil Natuna Sea Ltd of Britain, Gulf Indonesia Resources of Canada and U.S.-based Conoco Indonesia Inc.
Separately, the director general of oil and gas at the Ministry of Mines and Energy, Rachmat Sudibyo, said the West Natuna gas field was located close to a Malaysian-operated gas field, so that Indonesia would only need to connect the two countries' gas fields with a 40 kilometer pipeline.
Rachmat said the government hoped Malaysia would buy gas from Indonesia at the same price as that offered by Singapore, the first country to buy gas from the West Natuna gas field.
"The more, however, the better," Rachmat said.
He also estimated that Pertamina and Petronas would complete their negotiations by next month. They target to realize the project by the end of 2001.
"We could supply them (Malaysia) with gas for probably 20 years," he said.
The government announced its intention to sell gas to Malaysia during a meeting last Wednesday between Conoco and President Abdurrahman Wahid.
Minister of Mines and Energy Susilo Bambang Yudhoyono said negotiations between Pertamina and Petronas would be the second phase after Indonesia's first deal with Singapore.
Working under a production sharing contract with Pertamina, the West Natuna Gas consortium is obliged to supply gas to Sembawang Gas (SembGas) of Singapore, for 22 years beginning in July 2001.
Under the deal, SembGas will import 325 million cubic feet of natural gas per day through a 470-kilometer underwater pipeline running from the gas field in the South China Sea to Jurong (Sakra) island in Singapore.
Nevertheless, the consortium and Pertamina last year came under fire for awarding McDermott Indonesia -- a subsidiary of J. Ray McDermott SA of the U.S. -- with a $335 million project to install an underwater pipeline that would connect West Natuna with Singapore.
According to several Indonesian politicians, Pertamina appointed McDermott under political pressure.
During the meeting with President Abdurrahman, Conoco expressed commitment to continue its involvement in the Indonesia gas business.
Bambang said cooperation between the Indonesian government and Conoco dated back 40 years, and could be further expanded to other more constructive projects.
He said that during the last three years, from 1996 to 1998, Conoco had contributed about $1.2 billion to state income.
"Conoco wants to be part of revitalizing Indonesia's economy," Bambang said.
Attending the meeting with President Abdurrahman was Conoco's president and CEO, Archie Dunham, the company's financial vice president Robert Goldman and its exploration and production president T.E. Davis.(03)