Premier sues Conoco, Gulf over KL gas supply

JAKARTA (JP): British oil and gas company Premier Oil has filed an arbitration suit against American oil and gas company Conoco Inc. and Canadian oil and gas firm Gulf Resources in a dispute over a planned multibillion dollar gas supply from the West Natuna area in the South China Sea to Malaysia.

"We have confirmed that it (Premier Oil) filed for arbitration against them (Conoco and Gulf)," spokesman for state oil and gas company Pertamina's foreign contractors management body Sidick Nitikusuma told The Jakarta Post on Sunday evening.

"However, we can ensure that the dispute will not disrupt the planned gas supply to Singapore," Sidick said.

He, however, refused to provide details of the dispute.

The three companies are grouped in the West Natuna consortium that will supply gas to Singapore starting next year under a gas supply contract signed by Pertamina and Singapore's Sembawang Gas last year.

According to mines and energy specialist website Petromindo. Com the arbitration suit was filed by Premier some three months ago in London and the arbitration process is still in progress.

The website says the dispute centers around a planned gas supply from the Belanak gas field owned Conoco in West Natuna to the gas facility in the Duyung field owned by Malaysian oil and gas company Petronas.

Pertamina expects to sign a contract with Petronas for the gas supply next month.

The gas contract, if materialized, will generate between US$7 billion and $10 billion in revenue for the Indonesian government throughout the 20-year contract period, according to Pertamina's exploration and production director Gatot K. Wiroyudo.

Gatot was quoted by the website as saying Pertamina initially offered the three companies the chance to participate in the Pertamina-Petronas contract, but only Conoco had a proven and certified gas reserve.

Gulf told the website it would not participate in the contract because there were not enough gas reserves in its gas fields in the West Natuna area to supply to Petronas.

Premier has reportedly found gas in the West Natuna area but it had yet to certify the gas reserve when Petronas made an inquiry in January this year.

Conoco reportedly planned to connect its planned pipeline stretching from West Natuna to the Malaysian territory with the 640-kilometer West Natuna-Singapore pipeline being built and jointly owned by Premier, Conoco and Gulf.

Gulf said it could approve Conoco's plan to connect its pipeline with the consortium's pipeline provided that the American company pays a fee to the consortium.

Premier, however, objects to the plan and has filed an arbitration suit against both companies for breaching the contract on the use of the pipeline. (jsk)