Pertamina signs contract with Singapore Power for sale of Sumatra gas to Singapore
Monday, February 12 2001 - 04:15 AM WIB
State oil and gas company Pertamina signed on Tuesday a gas sales agreement with Power Gas Ltd, a subsidiary of Singapore Power, allowing the latter to send US$9 billion natural gas from the gas fields in Sumatra to Singapore for 20 years.
Present at the signing ceremony at the ministry of energy and mineral resources in Jakarta were among others Minister of Energy and Mineral Resources and Singapore's Minister for Trade and Industry Brig. Gen. George Yeo.
It is the second major gas agreement signed by Pertamina and a Singapore-based company after the contract signed by the state company with Sembawang Gas in 1999 for the supply of gas from the West Natuna area in the South China Sea to the city state.
The first delivery of the gas from West Natuna to Singapore was inaugurated last month.
The terms of the Sumatra-Singapore gas agreement include a contract quantity of 2.27-trillion cubic feet of sales gas to be delivered over a term of 20 years. Gas deliveries are expected to commence in mid-2003, with contract quantity of 150-million cubic feet per day stepping up year by year to 350-million cubic feet per day in 2009.
Pricing for the gas sales will be indexed to the pride of high sulfur fuel oil in Singapore.
The natural gas will be supplied from the Corridor and South Jambi B production-sharing contract (PSC) areas, both operated by Gulf Indonesia Resources Limited, and from the Jabung PSC area operated by Santa Fe Energy Resources (Jabung) Limited.
The gas will be delivered through approximately 500-km of new pipeline facilities to be constructed from South Sumatra to the island of Batam and Singapore, with about half of the length offshore. The Indonesian section of the 28-inch high-pressure pipelined will be owned and operated by PT Perusahaan Gas Negara (PGN), the Indonesian state gas distribution/transmission company, while the Singapore section will be owned and operated by PowerGas..
Total investment is estimated to be US$1.2 billion for additional infrastructure, including approximately US$800 million to be invested by the PSC contractors for development wells, gathering systems, and gas treatment and liquids recovery plants, and approximately US$400 million to be invested by PGN in the pipeline system.
During construction of the facilities, up to 4000 jobs are expected to be created and ongoing operations and maintenance are expected to create approximately 500 permanent jobs.
"At today prices, this gas sales contract represent approximately US$9 billion of gross foreign exchange revenue into Indonesia over the next 20 years," said Baihaki Hakim, president director of Pertamina.
"In addition, approximately 165 million barrels of associated LPG and condensate will be made available for sale, representing the potential for an estimated US$4 billion of additional revenue," he said.
"The conclusion of the gas deal signifies the beginning of mutually beneficial relationship between Singapore Power and Pertamina. It will yield a long term economic benefits for both Indonesia and Singapore," Brig . Gen. Beoy Tak Hap, president and CEO of Singapore Power said.
Gulf Indonesia holds a 54 percent working interest in the Corridor Block PSC and is contract operator for Pertamina. Partners are Talisman (Corridor) Ltd. (a subsidiary of Talisman Energy Inc.) with 36 percent and Pertamina with 10 percent. Gulf Indonesia also holds a 45 percent working interest in and operates the South Jambi B Block PSC on behalf of Pertamina. Partners are Santa Fe Energy with 30 percent and Pertamina with 25 percent.
Santa Fe Energy Resources holds a 30 percent working interest in and operates the Jabung Block PSC on behalf of Pertamina. Partners are Amerada Hess with 30 percent, Keer-McGee with 30percent and Pertamina with 10 percent. (Godang/Epin)