JAKARTA - The signing on
Monday of a US$4.3 billion gas sales deal by Indonesia's
state-run gas company PT Perusahaan Gas Negara (PGN) and
US firm ConocoPhillips is being referred to by the
government, shareholders and the public as a sign that
Indonesia's economy is on the mend.
Under the
contract, ConocoPhillips will supply 2.3 trillion cubic
feet of gas to PGN starting in 2007. The company also
expects additional earnings of around $200 million a
year from industries that would buy gas from it in the
years to come.
"Such a huge contract is a sign
that the country is recovering from the [economic]
crisis," State Enterprises Minister Laksamana Sukardi
said here after the signing of the 17-year gas sales
deal.
He said the deal marked the significant
improvement the economy had made from what it was two
years back when it was very difficult to attract foreign
investors, particularly for such a huge contract.
"It is a very huge contract, and in rupiah it
could reach Rp500 trillion ($54.1 billion)," Laksamana
said.
According to the Jakarta Post, officials
from ConocoPhillips have expressed confidence over the
gas market in Indonesia, citing abundant supply and
improving political stability as supporting factors.
Indonesia has natural gas reserves of 140
trillion cubic feet, and at present, only 80 trillion
cubic feet of that gas is contracted out. Indonesia is
also the largest liquefied natural gas (LNG) producer in
the world, exporting 55% of its annual production of 3
trillion cubic feet.
As the deal was announced
on Monday, PGN's president director, WMP Simanjuntak,
said that the company's earnings were up by 15% in the
first semester this year. Although he declined to
mention the exact amount of the company's earnings in
that period, he did say that they had increased by 15%
compared to last year's earnings, which reached Rp1.7
trillion ($185 million).
Meanwhile, Indonesia's
Energy and Mineral Resource Minister, Purnomo
Yusgiantoro, said the government had signed 24 gas deals
for both the domestic and export markets.
"For
domestic industries, we have signed 18 [gas] contracts;
for export, three [gas] contracts; and three contracts
for domestic LPG [liquefied petroleum gas]. So we now
have a total of 24 contracts," Purnomo said.
The
three gas deals for the export market are gas sales to
Singapore, Fujian province in China and Posko in South
Korea.
Purnomo also said the government has
signed 10 head of agreements (HoA) for domestic
industries, two HoAs for the export market and 10
memorandums of understandings (MoUs) for cooperation in
the gas sector, four of which were signed with
China.
ConocoPhillips Asia-Pacific president R M
Lance was quoted by the Jakarta Post as saying he
believed Indonesia was well on its way to regaining
confidence from foreign investors due to its
strengthening political stability.
He said the
company still has 2 trillion cubic feet of gas left to
sell, and is in discussions with PGN and Indonesia's
state electricity company, PLN, among other markets both
inside and outside of Indonesia to try and sell that
gas.
However, Lance and other officials also
noted that Indonesia needed to work harder to assure
national stability and security to entice more foreign
investors. They also said that as the domestic gas
market continued to grow, infrastructure needed to be
improved.
(Asia Pulse/Antara)
Aug 11, 2004
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