Pertamina to sell natural gas to Singapore power

JAKARTA (JP): State oil and gas company Pertamina will supply natural gas to Singapore Power Ltd. beginning in 2002 under a letter of agreement signed with PowerGas Ltd. here on Wednesday.

The agreement will be finalized into a 20-year contract with PowerGas Ltd., a subsidiary of Singapore Power Ltd. later this year under which the state company will supply 2.27 trillion standard cubic feet of gas worth US$7 billion.

Pertamina announced that Singapore Power would purchase 150 million standard cubic feet per day in mid-2002, increasing gradually to reach 350 million a day by 2008.

The gas will be transported through a 345-kilometer pipeline from Sakernan in Jambi to Batam, and onward to Singapore.

The gas will come from the Jabung block gas field operated by Santa Fe Energy Resources Jabung Ltd. of the United States, the Corridor and the South Jambi B blocks operated by Gulf Resources Ltd. of Canada under production sharing contracts with Pertamina.

The price of the gas will be pegged to the Singapore spot price of high-sulfur fuel oil 3.5 percent sulfur 180 centistokes, which is equivalent to the agreed price between Pertamina and Sembawang Gas for West Natuna gas supply.

"This is a very special event for Pertamina, because we will start exporting our natural gas not only as liquefied natural gas (LNG), but also as piped gas," president of Pertamina Martiono Hadianto said at the signing ceremony.

Indonesia currently exports LNG to Japan, South Korea and Taiwan, he said.

Pertamina estimates a total investment of $1 billion to make the gas available for the Singapore market. This consists of $700 million for infrastructure and a gas treatment plant and around $300 million for the gas transmission pipeline to Batam and Singapore.

The project will be financed by the Asian Development Bank, the European Investment Bank and the Japan Import Bank.

PT Perusahaan Gas Negara (PGN) has been assigned as the gas transporter, according to the gas transportation letter agreement signed on March 12.

PGN will construct a 28-inch diameter high pressure pipeline from Sakernan to Batam and Batam to Singapore with a total length of 345 kilometers, including 260 kilometers of offshore pipeline, PGN said.

According to PGN, the pipeline construction will commence in November 2000 and become operational in April 2002.

President and CEO of Singapore Power Boey Tak Hap said the gas supply agreement signified a major milestone in the development of the power and energy sector in Singapore to ensure a ready supply of clean fuel.

"We also intend to supply natural gas direct to industrial, commercial and domestic consumers," Boey said. (02)