APOGCE witnesses $3.26 billion in new contracts

The signing of seven gas deals worth a total of US$3.26 billion marked the opening of the Asia Pacific Oil and Gas Conference and Exhibition (APOGCE) on Tuesday in Jakarta.

The agreements include $2.5 billion in gas sales from ConocoPhillips to Chevron Pacific Indonesia. The agreement will replace a crude-oil-for-gas swap agreement between the two companies.

Under the swap agreement, 50,000 barrels of crude oil per day from Chevron's Duri field in Riau were exchanged for 400 million standard cubic feet of gas from ConocoPhillips' corridor gas field in Southern Sumatra.

Chevron requires the gas to inject into the Duri field to enhance oil recovery.

The swap mechanism has drawn strong criticism from legislators in recent years, because the swapped oil was never classified as part of the country's oil and gas production.

With the agreement signed Tuesday, ConocoPhillips and Chevron have agreed to replace the swap agreement with a regular gas sales contract. Under the new contract, ConocoPhillips will supply between 380 billion British thermal units per day (bbtud) and 450 bbtud of gas to Chevron for 13 years.

Also included in the contracts signed Tuesday was a gas sales agreement between PT Pertamina EP, a subsidiary of state oil and gas producer PT Pertamina, and state power firm PT PLN.

Under the contract, Pertamina will supply 28 bbtud of gas to fuel power plants in North Sumatra.

The eight-year contract is valued at $377.57 million.

Energy and Mineral Resources Minister Purnomo Yusgiantoro, who opened the APOGCE, said gas had become more important for the country, with domestic demand is growing rapidly. He added the government would prioritize domestic demand, but would not fully close export possibilities. The ministry also announced the government had just awarded five new CBM contracts with a total investment commitment of $37.98 million for the first three years of exploration.

The APOGCE, being held at the Jakarta Convention Center from Aug. 4 to 6, features sessions on the latest technology in oil and gas. The event is organized by the Society of Petroleum Engineers (SPE) and the Society of Indonesian Petroleum Engineers (IATMI).

The SPE and IATMI will concurrently hold the Asia Pacific Health Safety, Security and Environment Conference (APHSSEC).