Korean firms in Pertamina deal

Ika Krismantari, The Jakarta Post, Jakarta

State-run Korea National Oil Corporation (KNOC) and SK Corp. are to sign a memorandum of understanding (MoU) Tuesday on oil and gas exploration and production with Indonesia's national oil and gas firm, Pertamina.

The three companies will collaborate on oil and gas exploration and production both in Indonesia and other countries, KNOC exploration manager Sukyeon Hwang told The Jakarta Post following a meeting with senior officials from the Energy and Mineral Resources Ministry on Monday.

The meeting was only one of many to be held during a three-day visit by a South Korean business delegation, which comprises 190 senior executives representing major South Korean companies. They will be in Jakarta until Wednesday.

During Monday's meeting, another Korean energy firm, E1, said it would form a joint venture with Pertamina to build an LPG (Liquefied Petroleum Gas) plant in South Sumatra.

E1 representative Moon Soo Dong said the plant would have a designed capacity of 350 million cubic feet a day, and would cost about US$155 million to build.

He also said construction of the plant would begin in 2008, and that it was expected to commence commercial operations in the first half of 2010.

In the electricity sector, Korea Electric Power Corp. (Kepco) said that it agreed with state-owned electricity firm PLN to build a gas-fired power plant in Bojonegara, Banten, with an installed capacity of 750 megawatts (MW).

The plant is scheduled for completion between 2009 and 2010.

During the meeting, the world's largest LNG importer, Korea Gas (Kogas), said it was interested in taking part in the construction of a third train (processing unit) at the LNG plant in Tangguh, Papua.

The Tangguh LNG plant, owned by a BP Indonesia-led consortium, takes gas from a field that contains proven reserves of more than 14 trillion cubic feet. Trains I and II are currently in the final stages of construction. Based on existing contracts, Tangguh will deliver most of its LNG to South Korean firms Posco and SK Power.

According to a Kogas executive, who requested anonymity, the plan to invest in the Tangguh plant was part of the company's strategy to secure future LNG supplies from the plant.

Of the total of 24.6 million tons of LNG that South Korea imports every year, Kogas imports 5.3 million tons from Indonesia.

The company also expressed its interest in participating in the development of the country's gas fields by announcing its plan to take part in the next government tender for oil and gas blocks.