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)