U.S. firm Amerada to invest $500m in RI

Rendi A. Witular, The Jakarta Post, Jakarta

U.S.-based energy firm Amerada Hess Corp. plans to invest some US$500 million during the next two or three years to develop its offshore gas and oil concession in Pangkah, East Java.

Chief executive officer John B. Hess said on Wednesday that the investment was a vote of confidence in the business climate in Indonesia, with the company exploring further business opportunities in the energy sector here.

"Our first commitment is to invest some $500 million for developing the Pangkah project, which is scheduled to be completed in 2007," he said standing alongside Minister of Energy and Mineral Resources Purnomo Yusgiantoro, after meeting President Susilo Bambang Yudhoyono.

A gas sales agreement for the Pangkah project was signed last December to provide a supply of 440 billion cubic feet of natural gas over a 20-year period at an expected plateau rate of 100 million cubic feet per day (gross).

After the completion of the project, Hess said, Amerada had estimated its oil and gas production in Indonesia would reach about 25,000 barrel per day (bpd) from the current 5,000 bpd.

Poernomo said the gas from the Pangkah plant would be supplied to East Java consumers, including state gas distribution company PT Perusahaan Gas Negara, petrochemical firm PT Petrokimia Gresik and several other power plants.

Indonesia plans to eventually rely more on gas and coal for power in the future following a decline in its oil reserves, as well as the high price of the fuel on the global market.

Amerada also plans to develop other gas and oil concessions with state oil and gas firm PT Pertamina in Jambi Merang in South Sumatra and in Makassar Strait.

The company, which has been operating in Indonesia for 10 years, is currently engaged in developing an offshore gas and oil concession in Natuna island.

It acquired the Natuna Block A in 2003 from UK-based Premier Oil. Production is on stream, and, under the existing gas sales agreement is delivered to Singapore through the 675-kilometer West Natuna Pipeline System.

Amerada also has operations in the United States, United Kingdom, Norway, Denmark, Equatorial Guinea, Gabon, Azerbaijan and Thailand.

The company is focusing on increasing reserves outside the mature regions of the U.S. and the North Sea.