RESERVES HIKE TO BUOY BONTANG LNG

A redetermination of reserves in an Indonesian production sharing contract (PSC) will boost liquefied natural gas sales for an Indonesian joint venture (IJV) of Lasmo plc, Union Texas (South East Asia) Inc., Chinese Petroleum Corp. (CPC), and Japex Rantau Ltd.

The Indonesian reserves increase involves the Sanga Sanga PSC operated by Virginia Indonesia Co., a 50-50 joint venture of Lasmo and Union Texas.

Union Texas holds a 38% interest in the IJV and Lasmo 37.8%, with remaining interests held by CPC and Japex.

Meantime, in U.S. LNG news:

Shell LNG Co. has shelved plans to buy an added interest in the LNG business of Columbia Gas System Inc.
Panhandle Eastern Corp. units Trunkline Gas Co., Trunkline LNG Co., and Panhandle Eastern Pipe Line Co. (PEPL) filed settlement agreements with the Federal Energy Regulatory Commission to recover from customers $243 million in costs associated with Panhandle's Trunkline LNG operation at Lake Charles, La.

INDONESIAN LNG

Indonesian state oil company Pertamina earlier accepted production from the Sanga Sanga PSC as part of its Package IV sales contract. The contract calls for Sanga Sanga to provide 25% of supplies for the mammoth LNG complex being expanded at Bontang Bay, East Kalimantan. Total Indonesie is to provide most of the remaining supplies under the Package IV agreement. independent engineering firm DeGolyer & McNaughton certified an increase in Sanga Sanga's proved remaining gross reserves to 7.767 tcf of gas, plus probable remaining gas reserves of 1.276 tcf.

Package IV shares thus will be revised, with IJV's contribution increasing by an amount to be announced by Pertamina later this year.

Lasmo's share was increased by 34.1 million bbl of oil equivalent (BOE) to 454.7 million BOE of proved booked reserves as of Dec. 31, 1991.

Lasmo noted the reserves increase confirms the Sanga Sanga PSC's considerable potential, encouraging exploration and further development on the PSC. Production started in 1991 from Mutaira and Semberah gas fields on the Sanga Sanga PSC.

Lasmo also holds a 75.63% working interest in and operates the offsetting Runtu PSC, a 12,800 sq km block that is largely unexplored but has similar features to the Sanga Sanga block. Geological field work is under way, with a wildcat to spud soon.

BONTANG EXPANSION

When expansion of the Bontang LNG complex is complete in 1994, the plant will be the world's largest LNG facility.

Bontang, which accounts for 60% of Indonesian LNG exports, is having a sixth production train installed, while gas compression facilities on four of the existing trains are being upgraded.

When work is complete, gross throughput capacity will rise to 2.06 bcfd from the current 1.47 bcfd.

Of Bontang throughput, IJV's share under all its sales contracts is expected to be 1.08 bcfd in 1994, compared with 910 MMcfd in 1991 and 950 MMcfd this year. Bontang LNG cargo capacity is expected to rise to about 275 gross cargoes in 1994 from 197 in 1991 and about 212 in 1992. That breaks out net to IJV as 122 cargoes in 1991, 127 in 1992, and 144 in 1994.

Indonesia supplies 50% of the Pacific market's LNG requirements, with Bontang LNG shipped to Japan, South Korea, and Taiwan. Lasmo noted forecasts that rapidly growing Pacific Rim LNG demand will outstrip planned supply capacity by 1999.

SHELL'S PULLOUT

Shell LNG's board at midmonth said it will not proceed with the purchase because Columbia could not meet undisclosed presale conditions by a July 29 deadline (OGJ, July 20, p. 29). On that date, under a conditional agreement signed in November 1991, Shell LNG was to pay $45.75 million for 40.8% of Columbia LNG stock.

Shell LNG earlier paid $18.5 million for a 9.2% interest in Columbia LNG.

Among known presale conditions, Shell LNG had agreed at March 1993 closing to:

Pay $64.25 million for the remaining 50% ownership of Columbia LNG assets, including the LNG receiving and storage terminal at Cove Point, Md.
Arrange refinancing of Columbia LNG's outstanding debt to Columbia Gas, estimated at about $44 million.

Before the announcement that Shell LNG was withdrawing from the deal, the Cove Point LNG terminal apparently figured in Shell plans to start next year importing significant volumes of LNG into the U.S. The company early in 1991 signed a deal to begin importing and regasifying Algerian LNG through the Cove Point terminal in 1993.

A Nigerian LNG project under Shell's control is expected to start up in 1995. The sale of the Cove Point terminal also appeared to be an important item in the reorganization plan Columbia has been developing since it filed for protection under U.S. bankruptcy law last year.

PANHANDLE FILING

The Panhandle Eastern units' FERC bill payments from Trunkline Gas and PEPL rates.

If approved by FERC, the agreements would settle rate issues more than 10 years old and allow Panhandle's units to recover operating and maintenance costs of the LNG facility, costs of debt service, and part of a $196 million take or pay settlement with Algerian state oil company Sonatrach. Operations at the Lake Charles LNG terminal were suspended in 1983 amid sagging gas markets but were resumed late in 1989.

Panhandle earlier this year filed with FERC to recover more than $400 million prior to negotiations.