PGN, Santos sign E. Java gas deal

JSX-listed State gas distribution firm and Santos Ltd., Australia's biggest natural gas producer, on Tuesday signed Gas Sales Agreement to supply natural gas worth US$800 million.

Under the GSA Santos will supply PGN as much as 110 million cubic feet a day of the fuel from Santos's Maleo field in East Java for 12 years starting in August 2006, W.M.P. Simandjuntak, PGN's president director, told reporters in Jakarta.

PGN will pay $2.24 per million British thermal unit for the fuel.

"The gas supply from Santos will help us to meet robust demand in East Java," Simandjuntak said. "Demand in East Java is now at 250 million while we are only able to supply 120 million, cubic feet a day."

He further said Gas Transportation agreement (GTA) with between PGN and state oil and gas firm pertamina would be signed sometimes next week. Maleo's gas will be transported to onshore East Java using Pertamina's pipeline.

Santos operates and has 75 percent interest in Madura PSC license area where Maleo is located, while Canada's Talisman Energy Inc. has the rest.(godang)