ConocoPhillips Inks Gas Supply Deal in Indonesia

ConocoPhillips has signed a gas sales agreement with PT. Perusahaan Gas Negara (Persero) Tbk (PGN), the Indonesian state-owned gas transportation company, to supply a base load volume of gas for delivery to the industrial market located in West Java and Jakarta.

The agreement was concluded between PGN and ConocoPhillips' wholly owned subsidiary, ConocoPhillips (Grissik) Ltd., for the supply of 2.3 trillion standard cubic feet (tcf) of gas over a period of 17 years commencing in the first quarter of 2007 at a rate of 170 million cubic feet per day (mmcfd). The gas will come from the ConocoPhillips-operated Corridor Block PSC located in South Sumatra. Gas deliveries will plateau at 400 mmcfd in 2012 until the contract termination in 2023.

This natural gas sale to PGN will underpin the further expansion of gas production and gas processing facilities at the Suban gas field in the Corridor PSC operated by ConocoPhillips. This development, known as Suban Phase 2, will be connected to the Corridor PSC's existing gas processing facilities at Grissik in south Sumatra. PGN will construct a new pipeline from Grissik, through South Sumatra to Cilegon in West Java. A further pipeline also will be built to connect Grissik to Muara Tawar east of Jakarta. Construction of the 606-km Grissik-to-Muara Tawar pipeline is scheduled to take 30 months. The establishment of a dual pipeline system to customers in Jakarta and West Java will promote the expanding domestic gas market in Java.

The gas sales agreement has been approved by BPMIGAS, the regulatory organization representing the Indonesian State's oil and gas interests. BPMIGAS has appointed ConocoPhillips (Grissik) Ltd. to sell the State's portion of gas to be sold from the Corridor Block PSC under the agreement. ConocoPhillips (Grissik) Ltd. is the operator of the Corridor Block PSC with a 54 percent interest. Other Corridor Block PSC contractors are Talisman (Corridor) Ltd., a wholly owned indirect subsidiary of Talisman Energy Inc, 36 percent, and Pertamina, 10 percent.

Finalization of the agreement will conclude ConocoPhillips' fourth major domestic gas supply contract in Indonesia, which in addition to four major international gas sales contracts, strengthens the company's role as a leading gas producer in the region. ConocoPhillips' affiliates in Indonesia, acting as production sharing contractors for BPMIGAS, currently hold 13 contract areas across the Indonesian archipelago from Sumatra to Irian Jaya.