By an OGJ Online Correspondent
SINGAPORE, Feb. 13�Singapore has signed a 20-year agreement with Indonesia to buy 2.27 tcf of gas from South Sumatra for $9 billion.
The agreement came just weeks after Singapore and Indonesia opened the West Natuna gas transportation system, their initial multi-billion-dollar gas supply deal.
PowerGas Ltd. of Singapore negotiated the latest pact with Indonesia's Pertamina. Singapore will import up to 350 MMcfd through a 300 mile pipeline, about half of which will be offshore, from south Sumatra to the islands of Batam and Singapore. Deliveries will begin at 150 MMcfd in 2003.
The deal had been under discussion for some time (OGJ Online, Oct. 16, 2000).
PT Perusahaan Gas Negra, the Indonesian state gas distribution company, will own the Indonesian section of the line. PowerGas, a subsidiary of Singapore Power, will own the rest.
The project is expected to generate revenues of up to $7 billion for Indonesia and create more than 3,000 jobs when fully operational by July 2003.
Indonesian Mines and Energy Minister Purnomo Yusgiantoro said the deal would help the Indonesian economy recover from a recession. He said his government hopes to sign an agreement to sell gas to Malaysia by Apr. 1.
Like the $8 billion West Natuna gas deal, which required construction of a 640-km subsea pipeline, the new agreement would be another step toward a southeast Asian gas pipeline network.
The gas will come from the Corridor, Jabung, and South Jambi B projects on Sumatra.
Gulf Indonesia Resources Ltd. has 54% of the Corridor block and is operator. Talisman Energy Inc. has 36%, and Pertamina 10%. Through 2007, Corridor will supply 38% of the gas, increasing to 42% afterwards.
Devon operates the Jabung block with a 30% interest. Other partners include Amerada Hess (Indonesia-Jabung) Ltd., 30%; Kerr-McGee Sumatra Ltd., 30%; and Pertamina, 10%.
Gulf Indonesia Resources Ltd. operates South Jambi B with a 45% interest. Devon has 30% and Pertamina EP 25%.
The Jabung and South Jambi B partners said the gas production could also increase their gas liquids production. They said 15,000 b/d of gas liquids and 11,000 b/d of condensate will be produced initially, in addition to existing oil production of 21,000 b/d.
