Indonesia and Singapore gas supply deals set

Aug. 9, 1999
The oil and gas business should pay attention to, become involved with, and certainly not resist efforts by governments and interest groups to deal with urban sprawl.

Singapore`s SembCorp Industries says it has found buyers for all of the natural gas it has agreed to import from Indonesia.

SembCorp will buy the gas from Pertamina, which is obtaining it through production-sharing contracts with Conoco Indonesia Inc., Gulf Resources (Kakap) Ltd., and Premier Oil Natuna Sea Ltd. The gas will be produced from Blocks A, B, and Kakap in the West Natuna Sea and transported via pipeline to Singapore (OGJ, Jan. 25, 1999, p. 44).

In securing gas buyers, SembCorp made the surprise move of agreeing in principle to reallocate some of the gas from buyer Tuas Power to rival firm Singapore Power (SP). The reallocation was a result of Tuas Power`s decision to install only two gas-fired generators instead of four.

Tuas signed a take-or-pay contract with SembCorp unit SembCorp Gas Pty. Ltd. (SembGas) and thus is obliged to find a user for the other half of the 150 MMcfd of gas it has agreed to buy starting in 2001.

Speaking at a groundbreaking ceremony on Singapore`s Jurong Island for a SembGas import terminal and a SembCorp Cogen cogeneration unit, SembCorp Engineering Pres. Tang Kin Fei confirmed that his firm was in discussions with SP regarding allocation of the excess gas to the latter`s plant on Seraya Island. He said a formal agreement would be concluded by the end of the third quarter but declined to reveal any details of the proposed deal.

An SP official confirmed that SP was negotiating for the purchase of 75 MMcfd of gas from SembGas. Analysts in the region were reportedly intrigued by the arrangement to sell the excess gas to SP, which had been on the brink of concluding a deal to buy gas directly from Pertamina. That gas would have come from the Jablung block in South Sumatra (OGJ, July 19, 1999, p. 32).

The pipeline from Indonesia to Singapore is expected to be completed in 2001. It is being built in two sections. Conoco, Gulf, and Premier are responsible for the Indonesian leg, and a SembCorp-led group is laying the Singapore section. Gas shipments are expected to begin in mid-2001.

At the SembCorp groundbreaking ceremony, Singapore Economic Development Board Chairman Philip Yeo said that using the imported gas to fuel cogeneration would further reduce utility costs and enhance overall competitiveness for the chemical companies operating on Singapore`s Jurong Island, a massive complex of processing plants.

The cogen unit and import terminal are part of a development called SembCorp Utilities & Terminals (SUT). SUT is Singapore`s first centralized facility providing utilities, terminaling, and waste management to Jurong Island operators. It is expected to be completed in 2001.

A second SUT complex, SUT Seraya, will be built on Seraya Island. A third is planned, but details have not been decided yet.