Pertamina to get US$1.13b loan to build LNG plant

JAKARTA (JP): State-owned oil and gas company Pertamina will get a syndicated loan of US$1.13 billion to finance the construction of its eighth liquefied natural gas (LNG) plant in Bontan, East Kalimantan, the company said yesterday.

Pertamina president director Feisal Abda'oe said the loan agreement would be signed in Paris next month.

Bank of Taiwan will act as an arranger of the syndicated loan, which will also involve Chase Manhattan Corp., Banque Indosuez, Fuji Bank and Mitsubishi Corp.

Pertamina has six LNG plants in Bontang --- plants A to F -- and its seventh, G plant, is under construction with an expected annual capacity of 2.6 million tons of LNG.

G plant would raise LNG production at Bontang to 18.5 million tons a year, Feisal said.

Pertamina needs an eighth plant to meet the demands created by its new 20-year LNG sales contracts with Taiwan's Chinese Petroleum and South Korea's Korea Gas Corporation.

According to the contracts, Pertamina must sell 2.84 million tons of LNG to Taiwan and one million tons of LNG to South Korea annually from the year 2000.

The construction of an eighth plant, called H plant, by local contractors PT Inti Karya Persada Teknik and Bimantara, is scheduled to start in March and be completed in November 1999.

The new plant is expected to become the world's largest LNG plant with an annual capacity of 2.95 million tons of LNG a year.

Pertamina operates six other LNG plants in Arun, Aceh.

"Nine of the 12 LNG plants currently operated by Pertamina have paid for their loans," he said.

Pertamina's director for general affairs, Baharudin, said yesterday the company would negotiate a sales price for LNG from Natuna island with Petrochemical Thailand at a meeting later this month.

"There are still differences in the price of the gas even though we have reached an agreement on sales volume," he said.

The representatives of both companies would meet in Bangkok from Jan. 23 to Jan. 24, he said.

Pertamina was offering to sell the gas for US$3.1 for every million million barrel thermal unit (MMBTU) while Petrochemical Thailand wanted to pay $2.40 a MMBTU, said Baharudin who is also head of the marketing team for Natuna gas.

He said Petrochemical Thailand had agreed to buy 400 million cubic feet (12 million cubic meters) of gas a day when the gas facility on Natuna island was still at an early stage of production.

And it would buy one billion cubic feet (30 million cubic meters) a day when the facility was at peak production.

If Indonesia and Thailand reach an agreement, the gas from Natuna island would be piped to Thailand.

The pipeline is expected to stretch about 1,089 kilometers from Natuna to Songkhla on the border of Indonesia and Thailand, and continue for another 1,869 kilometers to Rayong in Thailand.

Another pipeline is to be built to pass through Sumatra to Arun to supply the LNG plant there with natural gas.

The Natuna gas field is believed to have a reserve of about 222 trillion cubic feet (6.5 trillion cubic meters) of natural gas.

Its gas has a high carbon dioxide content -- up to 71 percent -- making processing there costlier than at the other fields in Arun and Bontang.

Pertamina has signed an agreement with Esso Indonesia and Mobil Oil to develop the Natuna gas field. (jsk)