Indonesia-Singapore line gets sales pacts

Following some balky steps late last year, key contracts have now been signed for a pipeline project that will bring Indonesian gas to Singapore, following 2 years of planning.

The 28-in., 300-mile subsea pipeline will carry gas from fields in the West Natuna Sea to Singapore for use mostly in power generation. It will have a capacity of 325 MMcfd and is slated to begin deliveries by 2001.

Project participant Conoco Inc. calls the pipeline "the largest international natural gas supply and delivery system in Asia-Pacific. This will be the first international sale of pipeline gas from Indonesia and will provide Singapore with a clean-burning fuel for future industry growth," said Conoco.

The contracts

The line will transport gas produced by Conoco Indonesia Inc., Gulf Resources (Kakap) Ltd., and Premier Oil Natuna Sea Ltd. under production-sharing contracts with Indonesian state firm Pertamina see map [48,075 bytes].

Conoco is operator of Block B, Gulf Resources of Kakap block, and Premier of Block A. The companies have proven up gas reserves of 2.5 tcf in their West Natuna Sea Blocks.

The firms agreed to supply a total of 325 MMcfd of natural gas to Pertamina for 22 years beginning in mid-2001. Pertamina, in turn, signed an agreement to sell the gas to a consortium led by Singapore's Sembcorp Gas Pty. Ltd., which will use the gas for power generation and petrochemical projects.

Conoco, Gulf, and Premier will spend about $2.5 billion to develop the gas fields and build the pipeline. The Sembcorp-led group will invest about $1.2 billion, split between the Singapore portion of the pipeline, transmission infrastructure, and power plants.

Conoco Indonesia will manage construction of the pipeline-slated to begin "in early 1999"-and will operate the system when it comes on stream in 2001. Conoco says the project "is expected to stimulate further demand for natural gas and the development of known natural gas reserves in the West Natuna Sea." It will generate revenues for Indonesia of about $1 million/day, or $8 billion over its life span.

Rob McKee, Conoco's executive vice-president of exploration and production, said, "The fact this project is moving forward despite the current Asian economic situation demonstrates the importance of the project to all parties and demonstrates Conoco's commitment to maintaining a long-term presence in the region."