PGN signs East Indonesia gas supply agreement with Medco

State gas distribution firm PT. Perusahaan Gas Negara (PGN) said it had signed a memorandum of understanding (MoU) with publicly-listed oil firm Medco E&P to buy the latter?s gas from Senoro-Toili block in central Sulawesi.

PGN corporate secretary Widyatmiko Bapang said the MoU called for the supply of up to 350 million cubic feet per day (MMCFD) of natural gas for 20 years. The total gas supplies are valued at around US$3 billion.

Bapang said that Senoro-Toili?s gas would be either piped to PGN?s future customers in "central and eastern Indonesia" or be delivered in the form of compressed natural gas (CNG). He said that PGN is targeting electricity firm, mining firms and industrial complex operating in central and eastern Indonesia as future customers.

PGN expects to be able to sell the block?s gas in 2008.

Senoro-Toili block, which has an estimated 1.5 TCF of proven gas reserves, is jointly operated by Medco?s subsidiary Exspan Nusantara and Pertamina.

Bapang also said that PGN is also in talks to clinch a similar deal with Pertamina for gas supply from the latter's Donggi block, which is located in one complex with Senoro-Toili. (hotma)