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).