EXCLUSIVE: Premier sues Conoco, Gulf over Malaysian gas deal
Friday, September 15 2000 - 07:30 AM WIB
British oil and gas company Premier Oil has filed an arbitration suit against American oil and gas company Conoco and Canadian oil and gas firm Gulf Indonesia Resources over the planned multibillion dollar deal to supply natural gas from the West Natuna area in South China Sea to Malaysia.
Premier confirmed that it had filed the arbitration lawsuit but refused provide many details.
"We can confirm that there is an arbitration over the interpretation and application of an agreement among Gulf, Premier and Conoco concerning the operation of use and control of a portion of the West Natuna transportation system," company senior manager for administration and general affairs Santosa Kosasih said in a statement to Petromindo.Com, referring to the pipeline being built by the three companies for the transportation of natural gas from the West Natuna area to Singapore.
Conoco, Premier and Gulf Indonesia Resources are partners in the consortium that will supply natural gas from the West Natuna area to Singapore. They are building a 640-kilometer underwater pipeline connecting the West Natuna area with Singapore for that purpose.
"This arbitration is not intended to block or otherwise prevent or delay any sale of gas to Malaysia by Conoco or anyone else," Santosa said, adding that the arbitration was a private matter of Conoco, Gulf and Premier, whose details no parties should discuss in public.
Sources in state oil and gas company Pertamina said that Premier filed an arbitration suit against Conoco in London for its plan to "use" the West Natuna-Singapore gas pipeline, jointly owned by the three companies, for the supply of the latter's gas to Malaysia. Conoco reportedly wants to attach its West Natuna-Malaysia pipeline to the West Natuna-Singapore pipeline network.
The British company also sued Gulf Indonesia Resources for approving Conoco's plan.
Gulf Indonesia Resources also confirmed the arbitration.
"The lawsuit was filed about three months ago. And Gulf and Conoco have to submit their defenses to the arbitration court by the end of this month," Gulf Indonesia Resources' vice president for administration affairs Supramu Santosa told Petromindo on Tuesday.
Sources in Pertamina said Premier was disappointed over the fact that it failed to participate in the contract to be signed by Pertamina and Malaysian state oil and gas company Petronas.
Pertamina's exploration and production director Gatot K. Wiroyudo earlier said Pertamina and Petronas had agreed on the final draft contract and they expect to sign the contract in November this year.
Gatot explained that Pertamina would supply Petronas with gas from Conoco's block. The government expects between US$7 billion and $10 billion in revenue from the contract.
Gatot said Pertamina had initially offered the West Natuna consortium's members to participate in the gas deal but only Conoco had a proven and certified gas reserve.
Supramu said Gulf Indonesia Resources decided not to participate in the Pertamina-Petronas deal because it had not enough reserve and it did not mind Conoco using the West Natuna-Singapore gas pipeline provided that the American company paid some fee to the consortium, which owns the pipeline.
Sources said Premier claimed to have discovered gas for supplies to Malaysia, but it had not yet certified the gas reserve.
It asked Pertamina to still give it a chance to participate in the Malaysian gas deal in the future and allow it until the end of this year to certify its gas.
It remains unclear if Pertamina had turned down the request.
But, Conoco Indonesia's gas development manager Matthew Links told Petromindo that Premier had no more chance to participate in the gas deal under the rule set by the Gas Resources Management Committee (GRMC) formed by Pertamina.
GRMC is established by Pertamina to coordinate and manage the supply of gas from the West Natuna area.
Under the GRMC rule, Wilks argued, Pertamina would only give any available market to the contractors who have certified reserves at the time the market demand is confirmed, that is the time when the buyers reveal to Pertamina the amount of gas they want.
He said Conoco had certified its gas reserve in December last year, while Petronas made first inquiry in January this year. The gas reserve owned by Conoco is larger that amount needed by Petronas. (alex)