Santos, PGN to sign gas supply deal this week

Australia?s Santos Ltd will sign an agreement this week for supply gas to state-owned gas transmission PT Perusahaan Gas Negara (PGN), a government official said Monday.

"We hope that gas sales agreement between Santos and PGN could be signed this week," vice chairman of upstream authority BPMIGAS Kardaya Warnika said.

Kardaya said Santos would supply PGN with 100 million cubic feet of gas per day from Maleo field of the Madura PSC offshore East Java starting mid 2006 for a 15-year period.

PGN has agreed to buy the gas at a price of US$2.24 per million British thermal units at the field?s wellhead, Kardaya said.

Gas from Maleo will be delivered through a 7-kilometer subsea pipeline tied in to the existing the East Java Gas Pipeline. The East Java Gas Pipeline, which is owned and operated by state-owned oil and gas company PT Pertamina, stretches 440 km from Kangean Island to East Java?s mainland.

Kardaya added Pertamina and Santos will sign an agreement regarding the utilization of the East Java Gas Pipeline in next couple days.

Santos has 75 percent working interest in Madura PSC with Canadian oil firm Talisman Energy holds the remaining 25 percent. (alex/godang)