Pertamina says near gas supply deal with Malaysia

State oil company Pertamina said on Wednesday it had agreed in principle with Malaysia's Petronas to supply natural gas to Malaysia from South Sumatra province.

"We have agreed in principle with Petronas to supply the gas. There are just technical matters that need to be discussed further," Pertamina director Effendi Situmorang told reporters.

He declined to give details and said no documents had been signed yet.

Pertamina has previously said it planned to sell 300 million cubic feet of gas per day to Petronas from 2004 for 20 years from South Sumatra but that the sticking point had been price.

Situmorang said Pertamina would also sign an agreement with the Malaysian state oil firm to market gas to come from an overlapping field in Natuna in the South China Sea. He said Singapore was a possible destination.

The Natuna field straddles Indonesian and Malaysian boundaries and is believed to be rich in natural gas reserves, although no deal has been reached yet on tapping the field.

Pertamina has contracted with Petronas to supply 1.5 trillion cubic feet of gas from operator Conoco in west Natuna for 20 years from this August.

That field lies within Indonesian territory, and Pertamina officials said it might be officially inaugurated in front of Malaysian Prime Minister Mahathir Mohamad and Indonesian President Megawati Sukarnoputri, during a scheduled meeting between the two in Bali next month.

Conoco Indonesia President Patrick Meyer said the firm would keep drilling in Natuna, adding he expected more gas contracts involving Conoco in the area in the future. (godang)