RI set to start development of Natuna project

RI set to start development of Natuna project

JAKARTA (JP): State Minister of Research and Technology B.J. Habibie said yesterday he would soon form an engineering team and a construction team to start the development of the multi-billion dollar Natuna gas project.

Habibie said after reporting to President Soeharto at the latter's residence here that the two management teams would prepare terms of reference for the project to be put out to tender.

"I hope the project can be tendered as soon as possible because the target time for the first gas delivery is the year 2003," he said.

As chairman of the Natuna Project Development Authority, Habibie reiterated that he was counting on the participation of local private companies in developing the gas extraction project.

He said earlier that the engineering and designing of auxiliary facilities at the Natuna gas field had started and that construction is scheduled to begin early next year.

"To realize this project, it will need almost one million tons of steel just to build the platforms," Habibie said.

The project, which will need a total investment of some US$40 billion, will include 18 offshore platforms and six gas liquefaction trains on Natuna island. Each platform will weigh between 45,000 and 65,000 tons.

Habibie said he had visited Japan, the United States, Britain, Germany and the Netherlands to promote the Natuna project and had received positive responses.

Marketing

Speaking on the marketing of the Natuna gas, Habibie said there would be no serious problems because Indonesia could rely on traditional markets such as Japan, South Korea and Taiwan.

Indonesia is also sounding out possibilities of selling Natuna gas to other countries such as Thailand and China. The state- owned oil and gas firm Pertamina is currently engaged in negotiations with the Petroleum Authority of Thailand on possible gas sales to Thailand.

Habibie also said the government had approved plans by Pertamina to sell part of its 50 percent stake in the Natuna project.

Pertamina and Esso Natuna Inc., a subsidiary of Exxon Corp. of the United States, signed an agreement early last year to develop the Natuna gas field, splitting the shares of the project equally.

Habibie noted that the most important thing is that Pertamina's shares in the Natuna project were not less than 11 percent so that it would retain its veto.

He said Pertamina's shares could be purchased by foreign investors, citing Mobil Oil of the United States and Japanese investors. Mobil Oil has asked to be allowed to buy 26 percent of the Natuna project from Pertamina.

The Natuna gas field, located 225 kilometers northeast of Natuna island in the South China Sea, is estimated to contain 222 trillion cubic feet of natural gas. Only 75 percent of the gas is recoverable because of the high content of carbon dioxide. The field could yield up to 15 million tons of liquefied natural gas (LNG) per year for 30 years.

Indonesia is currently the largest producer of LNG in the world, with a total production capacity of 22.2 million tons per annum or 30.2 percent of the total capacity of the existing liquefaction plants in the world.

Indonesia's LNG comes mainly from two gas fields, one in Arun, Aceh, and the other in Bontang, East Kalimantan. Indonesia exports all of its LNG output to Japan, South Korea and Taiwan. (rid)