RI secures best deal on gas contract to Singapore

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Wed, 04/16/2008 12:31 PM  |  Business

The upstream oil and gas regulator BPMigas announced Tuesday it had secured payment of US$11 per million British thermal units (MMbtu) under an contract to export natural gas to Singapore.

The price is the highest among existing export contracts, said BPMigas marketing division head Budi Indianto.

Budi said under the contract, signed Tuesday, Indonesia would deliver the gas from a field in Gajah Baru, Natuna, operated by British-based PremierOil, to Singapore-based SembGas with a total volume of up to 100 million cubic feet for 18 years, starting in 2011.

Budi said the price of $11 per MMbtu was so far a good deal for Indonesia as the country had only gained $9 to $10 per MMbtu for exporting gas from its liquefied natural gas (LNG) plant in Bontang, East Kalimantan to Japan, Korea and Taiwan.

Unlike the Bontang gas, which is exported in the form of LNG, the gas to Singapore will be delivered through a pipeline.

As well as the gas export deal, PremierOil also secured a sales agreement with state power firm PLN to supply a power plant in Batam at a price of $5 per MMbtu with a total volume estimated at 40 million cubic feet.

To speed up exploration activities in the Gajah Baru field, BPMigas has approved the development plan of another field along with others located in Natuna Block A, Budi said.

The gas export contract will replace the previous contract between the two countries, which terminated because the buyer, Singapore-based Island Power, could not meet the requirements stated in the contract.

The contract was terminated last year due to Island Power's failure to secure a network operated by another Singaporean company, Gas Supply Pte. Ltd. -- a unit of Temasek Holdings.

Under the previous contract, U.S.-based ConocoPhillips was to supply 110 million standard cubic feet per day of gas from a field in Grissik, South Sumatra, to Island Power over a period of 13 years through a gas pipeline network.

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