Royal Dutch/Shell Group and El Paso Corp. asked to invest in a fourth Indonesian liquefied natural gas plant that would help boost exports as the country finds more reserves, a state oil company official said.
Indonesia has gas processing plants in Aceh and East Kalimantan and plans a third in Papua. After finding more gas in the Donggi field in Central Sulawesi, the world's biggest LNG exporter may build a fourth plant to get those reserves to market. Gas is liquefied so it can be transported by ship to markets such as Japan and Korea beyond the reach of pipelines.
``We've been approached by Shell, El Paso,'' said Iin Arifin Takhyan, Pertamina's vice president for upstream affairs. ``This year we hope to be able to certify that Donggi has 9 trillion cubic feet of proven reserves instead of 5 trillion.''
Indonesia has East Asia's biggest gas reserves and expects to earn 66 trillion rupiah ($7.4 billion) from the oil and gas industry this year, one-fifth of the country's budget revenue. Gas fields typically need to contain 10 trillion cubic feet in reserves to justify building an LNG plant, which can cost more than $2 billion.
Reserves in Donggi and neighboring fields may reach as much as 20 trillion cubic feet, Iin said. PT Medco Energi Internasional plans to spend about $300 million in the next five years exploring and developing the Senoro-Toili exploration area in Central Sulawesi to help supply the LNG project, Medco Energi chief operating officer Rashid Mangunkusumo said. Marathon Oil
Pertamina said in May that Marathon Oil Corp. may want to market gas in the U.S. from the Donggi field. Pertamina signed an initial agreement with Marathon, Iin said. He declined to say what the agreement was about.
Marathon, the fourth-biggest U.S. oil company, will build a $900 million receiving terminal in Baja California, Mexico, to turn liquefied fuel back into gas. Pertamina and Golar LNG Ltd., a Bermuda-based shipping company, are partners in the project that is expected to start operation in 2005.
Indonesia and its rivals including Malaysia are looking toward the U.S. as a potential market for their LNG after demand slowed from Japan, which buys almost 60 percent of the world's LNG.
Indonesia's planned third LNG plant, which would be developed in Papua, formerly Irian Jaya, with BP Plc, aims to sell the fuel to China.
Medco shares fell as much as 50 rupiah, or 3.6 percent, to 1,350.