Pertamina, Exspan project to build LNG plant to tap C. Sulawesi huge gas reserves

State oil and gas company Pertamina said it and its partner Exspan Indonesia, a unit of publicly listed oil and gas company Medco Energi International Tbk. is projecting to develop liquefied natural gas (LNG) plant in Banggai regency, Central Sulawesi where the two company had discovered Tangguh-sized natural gas reserve.

?We have world class gas reserve in Banggai could be developed at least into two trains of LNG plant with annual capacity of 6 million tons,? Iin Arifin Takhyan, Pertamina?s upstream director told reporters Wednesday.

Pertamina operates a Donggi block, where it had discovered 5.3 trillion cubic feet of proven gas reserve with 17.1 possible reserve. Pertamina together with Exspan operate the adjacent Senoro-Toili block in fifty-fifty partnership with 4 TCF of proven gas reserve and 2.5 TCF possible reserves.

?Altogether we have 28.9 TCF of proven and possible reserves in both area and also 105 million barrels of proven and possible reserves of condensate,? said Iin.

Iin said this year Pertamina and Exspan would drill five exploration wells within the exploration areas and projected spending to spend some US$ 500 million within the next year to develop the prospects. Iin said the investment needed to develop two trains of LNG would be around $ 1.4 billion.

Iin said there has been talks to jointly develop the giant gas field with several parties such as US based Marathon Corp. to market some 5 million tons of LNG annually to US market. Iin said Marathon is interested in upstream joint venture and also offered Pertamina and Exspan to partner in the LNG plant and receiving terminal that Marathon is going to construct in Baja, Mexico.

?El Paso had also express interest to market LNG from Central Sulawesi to the US and Asian markets, while Anglo-Dutch energy giant Shell has offer to build gas to liquid (GTL) facilities within the exploration block. There had also been talk to supply LNG to the Philippines and upstream participation of Philippine oil company PNOC,? said Iin.

Iin said in the future Donggi block and Senoro-Toili blocks would be integrated into one operation.

Iin, however, warned that all the talks with potential partners had thus far reached preliminary stage.

?We do not know for sure when we would start to build the LNG plant. It will depend on many factors such as whether or not we will be able to secure market for LNG. However, we are open to possible cooperation with interested partners, such as the scheme offered by Marathon,? said Iin.

Indonesia currently has two LNG centers in Arun (Aceh) and Bontang (East Kalimantan). Another LNG center, the Tangguh project is projected to become onstream early 2006. (alex/godang)