Conoco, Premier sign Gajah Baru swap agreement

By Bernard Loebs

Several parties signed on last Thursday agreements to send gas from the Gajah Baru field in Natuna Sea Block A to Batam and Banten through a swap scheme, according to upstream authority SKK Migas.

The agreements include the swap agreement signed by British firm Premier Oil Natuna BV and American firm ConocoPhilips and the gas sale and purchasing agreements signed by Premier and state owned gas distributor PT Perusahaan Gas Negara Tbk (PGN), state owned electricity firm PT Perusahaan Listrik Negara (PLN) and PT Banten Global Development (BGD).

Concoco is the operator of Corridor PSC in Sumatra, while Premier is the operator of Natuna Sea Block A PSC. Under the swap agreement, Premier will channel gas from Gajah Baru to Singaporean firm SembGas, which is a client of Conoco. In return, Conoco will channel gas to PGN, PLN and BGD from Corridor at the volume set in the contracts signed by Premier with the three companies.

Premier agreed to channel 5 British thermal unit per day (bbtud) of gas to PLN, 10 bbtud to BGD and 25 bbtud to PGN.

SKK Migas Secretary Gde Pradnyana said the agreements with PLN, PGN and BGD were temporary in nature. Premier has actually signed agreements with PT PLN Batam and PT Universal Batam Energy (UBE), which had been approved by the minister of energy and mineral resources, on the supply of a total of 40 bbtud of gas to both companies. The problem is that Premier cannot supply its gas to Batam Island at present because the absence of pipelines linking the island to Natuna Sea Block A.

There is a gas pipeline connecting the gas fields in Natuna Sea to Singapore, called West Natuna Transportation System (WNTS).

?In order that gas can be delivered from Gajah Baru to PLN Batam and UBE , a supporting infrastructure needs to be built, that is the development of a transmission pipeline fro WNTS to Pemping Island, which will be handled by PLN Batam and UBE. Besides, Premier Oil needs to develop an Onshore Receiving Facility (ORF). The infrastructures are expected to be completed in the third quarter of 2015,? Gde said.

Gde said the agreements were very important for the domestic market.

?These (the agreements) prove the government?s strong support for the increase in the supply of gas to the domestic market in the future,? he said.

Editing by Johannes Simbolon