Singapore Power, Pertamina say gas deal going forward

Singapore Power, Pertamina say gas deal going forward

SINGAPORE (Dow Jones): Singapore Power and Indonesia state-
owned oil and natural gas company Pertamina officials confirmed
Tuesday that negotiations for a multibillion dollar natural gas
deal are progressing, easing concerns that the project had
stalled.

Responding to reports Monday that it was negotiating to buy
natural gas from Singapore's SembCorp. Gas, Singapore Power
denied those discussions would have an impact on the Indonesia
project and said it expects to finalize a deal with Indonesia
"very soon."

"Yes, SP is negotiating with SembGas for the purchase of 75
million cubic feet a day for natural gas," Singapore Power
spokeswoman Alice Ong said. "This doesn't affect SP's ongoing
negotiations with Pertamina for the long-term supply of natural
gas from Asamera. We expect to conclude the Asamera deal very
soon."

Singapore Power and Pertamina signed a memorandum of
understanding in September 1998 for the delivery of 150 million
cubic feet of natural gas per day from the Asamera fields in
southern Sumatra to Singapore's power stations beginning in 2001.
The volume was slated to increase eventually to 325 million cubic
feet a day.

About five weeks ago, Pertamina Senior Vice President and
Director Priyambodo Mulyosudirjo said the deal had stalled
because Singapore Power wanted to buy a smaller volume of gas
than originally discussed. Singapore Power denied the report.

Priyambodo said Tuesday that the head of Pertamina's
negotiations with Singapore Power reported to him Monday that
talks were going well because Singapore Power was going back to
saying it would buy the original volume of natural gas discussed.

Singapore Power declined Tuesday to discuss any details of the
deal.

However, Priyambodo said talks had definitely deadlocked a few
weeks ago because of a disagreement about purchase volumes and
prices. He said he thought Singapore Power had "stepped up its
efforts intensely" to get a deal signed because of the media
reports about an impasse last month.

The companies had expected to finalize an agreement by March
of this year, but failed to do so after controversy arose over
tenders for the building of a 135-kilometer underwater pipeline
linking the Sumatran natural gas field to Singapore, costing an
estimated $354 million.

Although Priyambodo said he didn't know when the natural gas
deal with Singapore Power would be signed, he said the recent
progress in the talks was "a good sign. We all want this project
to proceed."

He said an agreement would have to be reached soon because
Indonesia state gas distribution company PT Perusahaan Gas Negara
has a deadline for securing loans to begin work on the pipeline.
He said he didn't know what that deadline was specifically, but
said it is "soon."

PGN is reportedly ready to build the pipeline, but has delayed
the project awaiting an agreement between Singapore and
Pertamina.