PGN says gas supply to Singapore on schedule

State gas company PT Perusahaan gas Negara (PGN) is still on schedule to build pipeline to supply natural gas from South Sumatra to Singapore, according to a company executive.

The company?s president Qoyum Tjandranegara told petromindo.com Monday that PGN is going to hold tender for engineering, procurement and construction in November this year.

Qoyum dismissed earlier reports that PGN might not be able to bring the gas pipeline on stream on schedule by September 2003 due to financing difficulties.

?So far we have secured US$180 million from Asian Development and European Investment Bank. We will use US$90 million from PGN?s equity and another US$ 100 million from foreign banks,? he said.

That would leave us US$100 million short. We are trying to raise the US$100 million through strategic partner,? he said.

Qoyum further added that currently PGN is holding talks with 10 potential strategic partners, including Tokyo Gas Corp., PowerGas of Singapore, Petronas of Malaysia, Enron Corp and Gulf Indonesia Resources.

He was optimistic that the financing scheme would be completed ?soon?.

He said the construction of the gas pipeline and compressors would cost PGN about US$470 million.

Earlier, PGN?s finance director WMT Simanjuntak said PGN planned to form a subsidiary to build, own and operate pipelines from the Grissik gas compression plant to Duri, in Sumatra, and from South Sumatra to Singapore. It would offer 25 percent of that company to strategic partners, Simanjuntak said.

Qoyum said that PGN, as earlier scheduled, planned to open engineering, procurement and construction tender for the project in November, thus enabling PGN to start piping gas by September 2003.

The construction of the pipeline is estimated to take 22 months to complete.

Singapore Power will import 150 MMCFD of gas beginning in mid-2003, pumping up to 350 MMCFD by 2009, for a total volume of 2.27 trillion cubic feet over 20 year.

The deal is estimated to generate US$9 billion gros revenue for Indonesia and its contractors.

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 Devon Energy. (godang)