EXCLUSIVE - Conoco says to become the only gas supplier to Malaysia
Sunday, September 10 2000 - 11:00 PM WIB
Oil and gas company Conoco of the United States said it would become the only contractor to supply natural gas to Malaysia under the multi-billion dollar gas deal to be signed by Indonesian state oil and gas company Pertamina and Malaysian state oil and gas company Petronas.
Matthew Wilks, gas development manager for Conoco Indonesia, told Petromindo.Com in a phone conversation on Friday that other production-sharing contractors of Pertamina operating in the West Natuna area, that is Gulf Resources of Canada and Premier Oil of Britain, would not take part in the deal for their failure to prove they had sufficient gas reserve.
"It will be Conoco's gas that goes to Malaysia ? There is no way Gulf and Premier (will) be part of this deal," said Wilks, who was accompanied by company vice president for development and relations AR "Dudung" Natanegara.
Industry sources say Gulf and Premier, which are Conoco's partners in the deal to supply gas to Singapore's Sembawang Gas, are really disappointed that they are not able to take part in the Malaysian gas deal.
Pertamina's exploration and production director Gatot K. Wiroyudo earlier told Petromindo that Pertamina and Petronas were about to finalize the negotiation on the terms of the contract for the supply of natural gas from the West Natuna area in South China Sea to Malaysia.
Under the contract, Pertamina will supply gas from West Natuna to Petronas' gas facility at the Duyung gas field, which is about 40 kilometers northwest of the West Natuna gas area.
Petronas has been supplying gas to the Malaysian mainland from the Duyung field but the field's gas reserve has been running out.
Gatot said Pertamina planned to supply between 250 and 350 million cubic feet of gas per day (MMCFD) to Petronas for 20 years, from which the Indonesian government expected to receive between US$7 billion and $10 billion in total revenue.
According to Wilks, the gas will be supplied through pipelines from Conoco's South West Belanak field, which currently has more than two trillion cubic feet of certified gas.
Gatot said Pertamina had offered all contractors grouped in the West Natuna Gas Reserve Management Committee (GRMC) - Conoco, Premier and Gulf -- to take part in the Pertamina-Petronas gas deal, but thus far only Conoco was prepared to participate in the deal as it had certified its gas reserve while Gulf and Premier had not.
The West Natuna's GRMC is set up by Pertamina to manage the supply gas from West Natuna.
However, Gatot did not make it clear if Gulf and Premier still have chances to participate in the gas deal in the future if they certify their gas reserve.
But Wilks insisted that Gulf and Premier had no more chances to take part in the deal as they had failed to show they had proven and certified gas when Petronas made an inquiry in January this year.
According to Wilks, under the GRMC's rule, Pertamina will give any available market only to the contractors who have certified reserves at the time the market demand is confirmed, that is the time when buyers reveal to Pertamina the amount of gas they want.
Wilks said Conoco was the only one among the West Natuna contractors group, which has a certified gas reserve when Petronas revealed to Pertamina the amount of gas they want to buy from the Indonesian state company.
"The first inquiry from Petronas came in January 2000, while in December 1999, we already obtained certification from D&M that declared our certified gas was more than enough than the Petronas needed
"So even if Gulf and Premier obtain the D&M reserve certification now, it will be Conoco's gas that go to Malaysia, because of the GRMC rule," Wilks said, referring to Dallas, Texas-based certification firm Degolyer & McNaughton.
The Malaysian gas deal will be the second gas deal to be signed by Pertamina involving contractors operating in the West Natuna area.
Last year, Pertamina signed a 22-year contract with Sembawang Gas to supply gas from West Natuna to Singapore.
The gas will be supplied from the fields owned by Conoco, Gulf and Premier starting January next year, four months ahead of the schedule set in the contract. (alex)