Pertamina, Indonesia's state owned oil and gas company, said yesterday it has agreed to sell natural gas valued at $9 billion to Singapore. Deliveries to Gas Supply Private Ltd, a wholly-owned subsidiary of PowerGas Ltd, are slated to start in 2003 under the 20-year sales agreement which covers gas to be supplied from three production sharing contract (PSC) areas onshore and offshore Sumatra:

- The Corridor PSC operated by Gulf Indonesia Resources, a subsidiary of Gulf Canada Resources Ltd, and 36 per cent owned by Talisman Energy Inc. - The South Jambi B PSC also operated by Gulf Indonesia and owned 30 per cent by Devon Energy Corp; and - The Jabung PSC operated by Devon. Its partners there are Amerada Hess Corp. and Kerr-McGee Corp.

Devon said sales of 150 million cubic feet of gas per day will begin in 2003. Deliveries will increase to a peak rate of 350 million cubic feet daily by 2009. For the period up to and including 2007, it is expected about 38 per cent of the gas will be supplied from the Corridor PSC, Gulf Indonesia said in a separate statement. For the period from 2009 onwards, it is expected that the Corridor PSC will supply 42 per cent of the gas.

Devon said the gas will be delivered through 500 kilometres of pipeline to be constructed from south Sumatra to the islands of Batam and Singapore. About half of the length will be offshore. Meanwhile, Pertamina confirmed yesterday it was negotiating to buy local assets of Spanish-Argentine oil group Repsol. The Madrid financial daily Expansion reported on its website on Friday that Jakarta had cleared Pertamina to buy up to 50 percent of the Indonesian assets of Repsol for up to $400 million.

"It is confirmed that Pertamina is talking with Repsol to buy (some of its assets) in Indonesia. We are still negotiating and Pertamina has the sole interest," Pertamina President Director Baihaki Hakim told reporters without giving details on the amount.

Asked if Pertamina had enough money to buy any assets held by Repsol, he said: "This is no problem because Pertamina has its equity and there is a chance of getting loans." Repsol is in the middle of a debt reduction plan and has announced major asset sales recently.

It extracts 122,660 barrels per day from the Java Sea, Expansion said, making it the number two oil producer in Indonesia after PT Caltex Pacific Indonesia. Officials were not immediately available to confirm Repsol's output or rank. The agreement was for Pertamina to buy between 25 per cent and 50 per cent of Repsol's assets, the report said.

In other developments, Indonesia's Riau province will decide this week if it accepts a government proposal to allot it only 10 percent of the Coastal Plain Pekanbaru (CPP) oil field, a Mines and Energy Ministry official said on Monday.

One oil industry source said it would be difficult for Riau governor Saleh Djasit to agree to the terms, considering disappointment among the province on Sumatra island that state oil firm Pertamina has been given a 90 per cent stake. "The governor of Riau has asked for two or three days to decide on the government proposal on CPP," Djoko Darmono, secretary general at the ministry told reporters after meeting Djasit.

"The governor will discuss with local parliamentarians the government proposal, including the stake in CPP. There will also be training for Riau people in relation to the oil field and more community development," Darmono said. The CPP oil field is operated by PT Caltex Pacific Indonesia but the contract expires this August.

Mines and Energy Minister Purnomo Yusgiantoro has said Pertamina had been given the majority stake to ensure production was maintained and technology developed. Riau had insisted on getting 70 per cent of the field, whose output had fallen to around 50,000 barrels per day (bpd) compared with its normal production of 70,000 bpd.

The oil industry source said the Riau governor was cornered by public opinion. "This has already become a political issue, where the Riau people firmly want the majority stake. I think they will reject the government's proposal...," he said. Caltex is jointly owned by Chevron Corp and Texaco Inc.