Singapore's growing industrial sector has spawned another natural gas supply project aimed at importing Indonesian gas into the small island nation.
Indonesian state oil firm Pertamina has signed a letter agreement with Singapore Power Co. for the sale of 2.27 tcf of gas over 20 years. Gas deliveries are to begin in mid-2002, moved through a new pipeline that will be built from fields in South Sumatra.
Negotiations have moved slowly this year on a similar deal between Singapore's SembCorp and operators of production-sharing contracts in the West Natuna Sea off Indonesia (OGJ, Aug. 9, 1999, p. 23). The details of that arrangement are yet to be finalized.
The latest deal was signed between Pertamina and PowerGas Ltd., a unit of Singapore Power. PowerGas will take 150 MMcfd of gas, to be transported through a planned 500-km pipeline from South Sumatra to Singapore via Indonesia's Batam Island. Singapore Power said the delivery quantities would be increased to 350 MMcfd in 2008. The additional gas will be used mostly to replace fuel oil and diesel feed in the industrial and power sectors.
Financing for the pipeline project has been arranged by Indonesian state firm PT Perusahaan Gas Negara.
"...The methodology to be used to calculate the pipeline tariff has been agreed to," said Gulf Indonesia Resources Ltd., operator of two of the blocks from which natural gas supplies will be taken. "The parties have targeted to finalize definitive sales and transportation agreements by yearend."
Pertamina will obtain the gas supplies for this agreement from its production-sharing contracts (PSCs) on the Corridor, South Jambi B, and Jabung blocks. Interests in Corridor are: operator Gulf Indonesia Resources, 54%; Talisman (Corridor) Ltd., 36%; and Pertamina, 10%. Interests in South Jambi B are: operator Gulf Indonesia Resources, 45%; TotalFina SA, 30%; and Pertamina, 25%. Interests in Jabung are: operator Santa Fe Snyder Corp., 30%; Kerr-McGee Sumatra Ltd., 30%; Amerada Hess (Indonesia-Jabung) Ltd., 30%; and Pertamina, 10%.
The partners in South Sumatra's Jabung block plan to drill 10 development wells there this year, according to Amerada Hess.
Santa Fe Snyder CEO James L. Payne said, "This agreement provides the catalyst to initiate development of natural gas and natural gas liquids in an integrated, efficient program, as well as providing an incentive to continue our very successful exploratory program. We have had exceptional success on the Jabung Block, drilling five discoveries on six prospects and successfully drilling 40 out of 41 total wells."
