PGN hopes Santos can begin gas supply next year

State owned gas distribution company PT Perusahaan Gas Negara (PGN) hopes that gas producer Santos Ltd will be able to begin the gas supply from its Maleo gas field off the coast of Madura island to the company's gas distribution network in East Java in 2006 at the latest, Invsetor daily reported on Tuesday.

PGN's operation director Nursubagjo Priono said in Jakarta on Monday that the additional gas supply from the Santos field was urgently needed to meet the growing gas demand in the province, which was expected to reach 200 million cubic feet per day in 2006.

He said that the documentation of the gas purchase contract for the supply of gas from the Maleo gas field had been completed but it could not be signed as long as the transportation agreement on the use of Pertamina's pipeline to transmit the gas had not been completed.

"We hope the two contract agreements could be signed soon," he said, adding that PGN hoped the signing would not be delayed so that Santos could meet its commitment to begin the gas supply 18 months after the signing of these two contracts.

Under the contract, Santos will sell gas up to 100 million cubic feet per day to PGN for US$2.24 per mmbtu for 15 years beginning 2006. In 2004, PGN was only able to provide 90 million cubic feet per day to its customers in East Java. The total demand in the area reached about 110 million cubic feet per day in the year.(*)