Conoco Awards EPCI Contracts for the Belanak Development

Conoco, under its South Natuna Sea Block B Production Sharing Contract (PSC) with Indonesian state oil and gas company Pertamina, has awarded two engineering, procurement, construction and installation (EPCI) contracts for the US$1.6 billion Belanak natural gas development offshore Indonesia, approximately 125 miles (200 kilometers) from Singapore.

The US$587 million contract for a floating production, storage and offloading (FPSO) unit was awarded to PT Brown & Root Indonesia, and the US$157 million contract for two wellhead platforms and associated pipelines and oil offloading buoy was awarded to PT J. Ray McDermott Indonesia.

The EPCI contracts support two separate natural gas sales agreements, both supplied by the Conoco-operated South Natuna Sea Block B PSC. The first natural gas sales agreement is a 22-year contract between Pertamina and Singapore's SembCorp Gas for the long-term delivery of natural gas to Singapore. The second agreement is a 20-year contract between Pertamina and Malaysia's state oil and gas company Petronas for the delivery of natural gas to Malaysia.

With expected ultimate production of approximately 600 billion cubic feet of natural gas, and 100 million barrels of oil, condensate and liquefied petroleum gas (LPG), Belanak is the cornerstone for supplying future natural gas under both agreements, and for the development of extensive reserves of liquids in the South Natuna Sea Block B PSC.

The Belanak structure will be developed utilizing an FPSO with LPG extraction facilities; two wellhead platforms; 38 wells; a floating storage and offloading (FSO) unit for LPG; a gas export pipeline; and intra-field pipelines.

In addition, an estimated 1.4 trillion cubic feet of natural gas and 150 million barrels of oil, condensate and LPG from at least six other nearby fields will be produced through the Belanak facilities, which will serve as a central gathering hub. This will significantly lower development costs by reusing and avoiding duplication of facilities, as would have been the case with individual, non-coordinated developments.

The Belanak FPSO will process up to 350 million cubic feet of natural gas per day for export; up to 100,000 barrels of oil and condensate per day; and up to 23,000 barrels of LPG per day. The 1,000-foot vessel will have the capacity to store up to one million barrels of oil, which will be off-loaded to tankers for onward transportation. It will be installed and ready for production in late 2004.

Conoco Inc., through its wholly owned subsidiary Conoco Indonesia Inc. Ltd., holds a 40-percent working interest in the South Natuna Sea Block B PSC. Other partners include Inpex Natuna, Ltd. with 35 percent and Texaco South Natuna Sea, Inc. with 25 percent.