Petronas to supply gas to steel, power project

Malaysian state oil company Petronas has signed a heads of agreement with Nusantara Steel Group Sdn. Bhd. to supply up to 200 MMcfd of natural gas for 20 years to an integrated steel mill project at Kampung Limau-Limauan in Kudat, Sabah. Included in the project is a gas-fired power plant.


SINGAPORE�Malaysian state oil company Petronas has signed a heads of agreement with Nusantara Steel Group Sdn. Bhd. to supply up to 200 MMcfd of natural gas for 20 years to an integrated steel mill project at Kampung Limau-Limauan in Kudat, Sabah. Included in the project is a gas-fired power plant.

The steel mill project will involve the construction and establishment of an integrated steel mill complex comprising a gas-based, direct reduction iron plant and a hot rolled-coiled mill as well as a gas-fired power plant to generate electricity exclusively for the complex. About 70% of the project's total gas requirement will be used as feedstock for the steel mill complex, while the remaining 30% will be reserved for power generation.

Under the agreement, Petronas will supply the gas to the project in two stages beginning in the third quarter of 2003, when the steel plant is scheduled to come on stream. In the initial stage, during 2003-05, up to 100 MMcfd of gas will be supplied to the project. This volume will be increased to 200 MMcfd during the second stage, during 2006-23.

The gas will come from fields off Sabah, namely Erb West, Kinarut, and Kebabangan. The fields are being developed by Petronas production-sharing contractors, including wholly-owned Petronas subsidiary Petronas Carigali Sdn. Bhd.

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