Singapore Power to sign RI gas import MOU this month

Singapore Power to sign RI gas import MOU this month

SINGAPORE (Dow Jones): State utility Singapore Power is due to
sign a memorandum of understanding to import natural gas from
southern Sumatra, Indonesia, on Sept. 15, a senior official close
to the deal told Dow Jones Newswires Monday.

All parties involved are ready for signing of the MOU, which
was delayed from late August owing to difficulty scheduling
appearances, said Bill Fanagan, president of Gulf Indonesia
Resources Ltd (GRL), which would supply much of the gas under the
proposed deal.

Gulf Indonesia, a New York-listed affiliate of Gulf Canada
Resources Ltd (GOU), aims to have a more definitive agreement by
the end of October and a final deal by the end of March 1999,
Fanagan said.

In a deal worth billions of dollars, the company plans to sell
about 325 million cubic feet a day of gas from three concessions
in southern Sumatra to Singapore via a spur pipeline from a
trans-Sumatran pipeline completed last month. The proposed
pipeline spur would be constructed by state utility Perusahaan
Gas Negara and largely financed by the Asian Development Bank.

Fanagan said natural gas for the proposed deal would come from
proven reserves in three production-sharing contract areas of
southern Sumatra: Corridor, South Jambi B and Jabung. Gulf
Indonesia is operator for the Corridor and South Jambi B blocks
in which it holds working interests of 54 percent and 45 percent,
respectively. Santa Fe Energy Resources Inc (SFR) is operator for
the Jabung block.

Officials from Singapore Power, Indonesia's national oil and
gas company Pertamina, Gulf Indonesia, Santa Fe Energy, PGN and
ADB are expected to be in Singapore for the Sept. 15 signing.

Fanagan also said Perusahaan Gas Negara has completed
construction of the Corridor natural gas pipeline, which will
help raise sales of Indonesia's Duri crude oil.

The 540-kilometer Corridor gas pipeline was completed in
August, and pipeline operators are currently drying the pipeline
with initial gas flows, he said.

By the end of the month, initial natural gas flows from
southern Sumatran fields operated by Gulf Indonesia are scheduled
to begin replacing crude oil burned for steam at the pipeline's
northern terminus, Fanagan said.

By early 1999, PT Caltex Pacific Indonesia will use about 300
million cubic feet a day of gas from the pipeline to replace the
60,000 barrels a day of Duri crude oil currently burned to
produce steam for enhanced oil recovery from its central Sumatran
oil concessions. Caltex is a joint venture between Chevron Corp.
(CHV) and Texaco Inc. (TX).

The government estimates the Corridor gas project will save
Indonesia $780,000 a day.

Gulf Indonesia and its partners Indonesian national oil and
gas company Pertamina and Talisman Energy Inc. (TLM) will take
ownership of the displaced Duri crude, which will be marketed by
Itochu Corp. (J.CIT).