S'pore gas deal still on despite Gulf disagreement

JAKARTA (JP): State oil and gas company Pertamina said on Wednesday that a land dispute involving its gas contractor Gulf Indonesia Resources Ltd. in South Sumatra should not affect its deal to supply natural gas to Singapore's PowerGas.

Pertamina's spokesman Ramli Djaafar, nevertheless, warned that the land dispute, if not quickly resolved, was likely to affect ongoing negotiations with PowerGas for the gas supply.

But he said Pertamina and Gulf were optimistic about quickly finding a solution to the land dispute to prevent it from affecting negotiations.

"We expect to solve the dispute as soon as possible," Ramli told The Jakarta Post.

The New York-listed Gulf Indonesia Resources, a subsidiary of Canada's Gulf Resources, has been accused by an oil palm and coconut plantation of appropriating plots in its plantation area in Grissik, Musibanyuasin, to develop gas terminals and pipelines, without paying compensation.

Gulf, however, said it had paid compensation to the plantation's administrator in 1996 but the administrator had reportedly not delivered the money to company's shareholders.

The Sekayu District Court issued a provisional judgment last week ordering Gulf to stop operations pending the court's final judgment.

Gulf has filed an appeal against the provisional judgment with the South Sumatra High Court.

Gulf's gas project is part of the central Sumatra pipeline project in which Gulf sends gas from its gas fields via a 536- kilometer pipeline owned by state gas distribution company PT Perusahaan Gas Negara (PGN) to the Duri oil field owned by PT Caltex Pacific Indonesia.

Pertamina has also signed a memorandum of understanding in September to supply gas to PowerGas for the purpose of generating power through a pipeline to be built by PGN from central Sumatra to Singapore via Batam island.

Commercial aspects of the agreement were scheduled to be finalized last month and the signing of the contract is slated for March 31, 1999.

Ramli noted that Pertamina's future gas supply for PowerGas was not only from Gulf's fields but also from gas fields in the Jabung block in South Sumatra owned by Santa Fe Energy Resources (Jabung), a subsidiary of America's Santa Fe Energy Resources Ltd.

As such, if a problem occurs regarding gas supply from Gulf's fields, Pertamina could still obtain supplies from Santa Fe's gas fields, Ramli said. (jsk)