RI, U.S. sign agreements on $40b projects

RI, U.S. sign agreements on $40b projects

JAKARTA (JP): Indonesia and the United States marked a
historic step towards greater business cooperation yesterday by
concluding 17 agreements and memorandums of understanding
involving total investments of US$40 billion.

The momentous occasion, described as business momentum sparked
by the spirit of the Asia-Pacific Economic Cooperation (APEC),
was marked by the signing of a memorandum of understanding for
development of the $35 billion natural gas liquefaction project
off Natuna -- about 1,110 kilometers north of here and about 600
kilometers northeast of Singapore.

The signing ceremony was officiated by U.S. Secretary of
Commerce Ronald Brown and witnessed by U.S. Ambassador to
Indonesia Robert L. Barry and eleven Indonesian ministers,
including State Minister for Research and Technology B.J.
Habibie.

"Today's event also shows the vitality and tremendous
opportunities that Indonesia has offered to us," Brown said in
his opening speech at the signing ceremony.

"Contracts, memorandums of understanding and various business
agreements are real and concrete examples of the strengthening of
the commercial ties between the two nations," he said.

Specifically he referred to the major step of the state oil
and gas company Pertamina and its contractor Esso Natuna Inc., an
affiliate of the U.S. Exxon Corp., which successfully reached
agreement on the development of the largest offshore natural gas
project in Asia and the Pacific.

Final agreement

Habibie, who is also the chief supervisor of the Natuna
project, told reporters after the ceremony that the deal on the
Natuna project will be followed by a final agreement in January
when Indonesia's new tax laws come into force.

He declined to elaborate but said: "All our negotiations will
be in line with the new ruling."

"After the planned January agreement, Esso will need three
years to further engineer and design other auxiliary facilities
at the Natuna field, which is designed to have 18 platforms," he
said.

Of the 18 platforms, six are drilling platforms -- each with
36 wells, he added. "You can imagine that each of the six
drilling platforms will need some 65,000 tons of steel, while the
remaining 12 platforms will use some 45,000 tons of steel each,"
he said.

Habibie declined to elaborate on the profit share Esso would
take in the project. But an informed source said that both
parties have agreed on a 50:50 profit share arrangement.

He said that upon completion, the project will be capable of
producing up to 35 million tons of liquefied natural gas (LNG)
per year for over 20 years.

Other contracts

In addition to the Natuna contract, Mission Energy and General
Electric also signed a memorandum of understanding for a $500
million contract for the supply of equipment and services to a
1,230 megawatt (MW) coal-fired power plant in Paiton, East Java.

California Energy Company signed an energy sales contract and
a joint operation contract with Pertamina to build, own and
operate a geothermal power plant at the Dieng geothermal field at
a total cost of some $450 million.

Meanwhile, Herald Energy Corp. signed a deal for a $300
million coal-fired power project with a capacity of 200 MW in
Sibolga, North Sumatra, and another agreement for a $200 million
coal-fired plant in Amurang, North Sulawesi. The plant will have
a capacity of 110 MW.

Unocal Geothermal Indonesia, a subsidiary of Unocal Corp.,
closed a $330 million deal with the state electricity company PT
PLN for building and operating three 55-MW plants on Mount Salak
in West Java.

General Electric made a deal for a joint venture with the
Habibie-chaired Indonesian Agency for Strategic Industries (BPIS)
for producing gas turbines. General Electric also will set up
another joint venture with the Indonesian state-run railway
company, Perumka, for producing locomotives. The contract is
worth around $17.5 million.

PT Puncak Jaya Power made a $215 million deal with PT Freeport
Indonesia Company for acquisition and operation of the power
generation and delivery systems at Freeport's Irian Jaya power
plant.

Law International and Indonesia's PT Carita Krakatau Int'l had
an agreement to provide engineering services for water supply,
sewage and drainage at the Carita Bay Tourist Resort in West Java
under a contract amounting to $200,000, while Fuller Int'l Inc.
and PT Semen Gresik signed a memorandum for supply of one
additional production line with a contract valued at $74.7
million. Aquatic Unlimited made a $10 million deal with PT Amarta
Karya for environment activities.

The Export-Import Bank of the United States signed a credit
agreement with the Ministry of Finance for a $65 million AT&T
contract with PT Telekomunikasi Indonesia for providing 1.1
million new lines in the country, while the bank also closed a
deal with the Ministry of Forestry to support Motorola's $104
million project, in which Motorola will provide an integrated
communications system to help the country's forest conservation
and preservation programs.

Ellicott Machine Corp. Int'l of Baltimore also signed a
memorandum of understanding for the supply of the $25 million
auxiliary dredging equipment for the Ministry of Transportation,
while Hughes Network Systems Inc. (HNS) entered a $130 million
agreement with PT Ratelindo for the expansion of its fixed
wireless communications system in the country. (fhp)