Donggi Senoro LNG partners sign shareholder agreement

Indonesian stock exchange-listed energy firm PT Medco Energi Internasional Tbk. has signed a shareholder agreement (SHA) with Japanese firm Mitsubishi Corp. and state oil and gas firm PT Pertamina to build an LNG plant in Central Sulawesi.

Under the deal signed on December 19, 2007, all parties agreed to establish PT Donggi Senoro LNG (DSLNG) to operate the LNG plant, Medco said in statement filed to Indonesian stock exchange on Wednesday.

Currently, DSLNG is negotiating a gas sales and purchase agreement (GSPA) with gas suppliers and upstream oil and gas regulatory body BPMIGAS. The GSPA is expected to be finalized in 2008, it said.

Pertamina has a 29 percent stake in the project, with Mitsubishi Corp. and Medco holding 51 percent and 20 percent, respectively.

The parties agreed that the LNG project shall be structured as a downstream business project and be separated from the upstream business. This is in line with Oil and Gas Law No.22 of 2001 and Government Regulation No. 36 of 2004, it said.

DSNLG will handle all activities related to the LNG project, including studies, financing, design, engineering, development, construction, commissioning. DSLNG will also handle the marketing and delivery of the LNG to be produced from the plant.

Gas feed for the project will be sourced from two blocks operated by Pertamina (Donggi block) and Pertamina-Medco (Senoro-Toili block).

The project is estimated to cost US$1.2 billion. The plant is expected to be completed in 2010. (denny)