Santos signs second gas sale deal with Indonesia

Feb 02, 2003 01:00 AM

Oil and gas major Santos has confirmed a contract for its second major gas sale agreement in Indonesia as the Adelaide-based group builds a solid base in south east Asia. Less than 18 months after discovering the Oyong gas field in East Java, Santos has signed a heads of agreement contract with state utility PT Indonesia Power to buy its entire gas reserve.
The Oyong field is estimated to contain more than 90 bn cf of recoverable gas. The agreement, signed in Bali in the presence of Indonesian president Megawati Sukarnoputri, will see Santos' wholly owned subsidiary Sampang provide PT Indonesia Power gas for the life of the field or up to 10 years.

The deal, worth "hundreds of millions" to Santos, will supply PT Indonesia Power's 766 MW open and combined cycle gas turbine facility at Grati, 60 km south west of the Oyong field. First gas supplies are expected to commence in late 2004, with a minimum of 60 mm cfpd of gas delivered to Grati with payment in United States dollars.
Santos managing director John Ellice-Flint said the agreement would be the company's second gas sale from its Indonesian operations. "It adds to the solid base we are building in south east Asia and is in line with our overall growth strategy which includes international diversification of our gas business," he said. "Our relationship with PT Indonesia Power is an important one for Santos given our developing gas reserves base and rapid gas commercialisation strategy."

Santos business development general manager Graeme Bethune told that to be able to commercialise gas within 18 months of a discovery was record-timing.
"At the moment we don't produce anything in Indonesia but within the last five months we've announced two major commercialisations of resources... there is a shortage of gas in East Java." Front End Engineering Design for the Oyong development is expected to be concluded by March, with the cost of development not known until that is complete.
In August 2002, Santos signed a Memorandum of Understanding to supply gas to state-owned Petronas in Malaysia for 20 years from the Bentu and Korinci-Baru PSC's in central Sumatra. Santos is the 45 % owner and operator of Sampang, with a subsidiary of US-based El Paso owning 40 % and Australia's Cue Pty the remaining 15 %.

Source: Asia Pulse
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