S'pore gas deal still on despite Gulf disagreement

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)