$10 billion energy deals to be signed next week

Ika Krismantari, The Jakarta Post, Jakarta

The government and a number of companies are set to sign energy contracts worth about US$10.125 billion at the opening of the Asia Pacific Oil and Gas Conference and Exhibition (APOGCE) 2007 here Monday.

"The signing of the contracts will be witnessed by President Susilo Bambang Yudhoyono," Energy and Mineral Resources Ministry secretary-general Waryono Karno said Thursday.

According to a document received by The Jakarta Post, the agreements cover finance and development of oil and gas projects, power projects and natural gas sales.

The highest value deal to be signed relates to sales agreements for 1.641 trillion British thermal units of gas worth about $5.5 billion.

Other projects include agreements governing development of the Oyong (oil) and Ujung Pangkah (oil and gas) fields in East Java, respectively worth an estimated $303 million and $930 million.

The Oyong field, operated by Australia-based Santos, is expected to produce 6,000 barrels of oil per day, while Ujung Pangkah, operated by US-based Hess, is to produce 6,000 barrels per day and 10 million cubic feet of gas per day.

During the event, state-owned electricity company PLN will also sign five power purchase agreements with independent power producers and agreements for the construction of five coal-powered plants to be built outside of Java as part of the government's crash program to produce 10,000 additional megawatts (MW) of electricity by 2010.

The five new plants are in North Sumatra (400 MW), Lampung (200 MW), North Sulawesi (50 MW), Gorontalo (50 MW) and West Nusa Tenggara (50 MW).

"We will also see the signing of the second stage loan agreement for the Tangguh project which is worth $884 million," Waryono said.

The loan will be provided by a consortium of lenders led by China's Fujian bank.

Tangguh operator BP Indonesia, the Indonesian arm of BP Plc, signed first tranche facility agreements worth $2.6 billion in August last year with Japan Bank for International Cooperation, Asian Development Bank and a consortium of international commercial lenders.