Indonesia-China Energy Forum part of high-level moves to strengthen ties: Report
Sunday, September 8 2002 - 12:12 AM WIB
The forum is scheduled for Sept 25-28 in Bali. It follows a memorandum of understanding (MoU) on energy sector cooperation signed between the two countries in March, the result of a meeting between Indonesian President Megawati Sukarnoputri and Chinese Premier Zhu Rongji in Nov 2001.
The schedule includes the signing of a new MoU and/or letter of intent (LoI) on Sept 26, following a bilateral plenary meeting.
"(The forum is) expected to achieve concrete results in the form of cooperation agreements between the two countries and between the respective business entities in the energy sector, which have paved a way since the signing of the aforementioned MoU" in March, the documents said.
"The bilateral meeting first part will discuss collaboration projects that were agreed upon and initiated before/at the meeting in Beijing, 23-24 March 2002, covering status and follow-up ... and (be) followed by the signing of an MoU and/or LoI."
Talks on possible long-term commitments for China to buy gas from Indonesia's US$2.0 billion Tangguh project will be a major highlight of the forum.
Tangguh heads a list of 25 collaboration projects between the two countries as part of a broader strategic cooperation initiative, as China encourages a switch to gas away from dirtier, more inefficient coal.
The next biggest is a $1.7 billion gas pipeline stretching 1,100 kilometers from East Kalimantan to East Java, expected to be implemented between 2005-2010.
China is considering providing a $500 million concessionary loan and some $300 million in convertible loan to equity from Chinese national companies to help fund the project, the documents said.
The rest of the pipeline's funding is proposed to come from the Asian Development Bank ($250 million), export credit ($250 million), the European Investment Bank ($100 million) and Indonesia's state-owned PT Perusahaan Gas Negara ($300 million).
A spokesman for PGN -- the owner/operator of the pipeline -- would not confirm the funding sources, saying only that talks with China are ongoing as to how much it will provide and by what means.
In addition, China and Indonesia are discussing joint exploration and production opportunities for hydrocarbon in both countries, to be implemented by the end of this year, the documents said.
The exploration projects will run for five years at a cost of $30 million, while the production ventures will be over 20 years at a cost of $500 million. Final costs depend on the hydrocarbon reserves found.
Between 40-60 percent of the project costs will be internally financed.
Apart from projects undertaken within Indonesia and China, the two governments are also exploring opportunities for collaboration on projects in other countries.
The forum theme is - "Opening, developing and capturing collaboration opportunities in the energy business sector that (are) of mutual benefit to Indonesia and China to enhance the economic and social development in the two countries." (*)