indonesia pgn: in initial lng deal with energy

=DJ UPDATE: Indonesia PGN: In Initial LNG Deal With Energy World

(Adds comments from chief executives of PGN, Energy World; background on Sengkang
development.)

JAKARTA (Dow Jones)--Indonesian state gas company PT Perusahaan Gas Negara (PGN.JK) has
signed an initial deal with the local unit of Energy World Corp. Ltd. (EWCLF) to
distribute liquefied natural gas from the Sengkang LNG development in South Sulawesi
province, company officials said Monday.
Chief Executive Hendi Prio Santoso told reporters PGN that will distribute 1.5 million
to 5 million metric tons of LNG a year from the development as soon as the Sengkang
receiving plant becomes operational.
Energy World Chief Executive Stewart Elliott said the Sengkang plant, operated by unit
PT Energy Equity Epic Sengkang Pty. Ltd., is scheduled to be operational within 12 to 18
months and will initially produce about 2 million standard cubic feet of LNG a day.
The deal between the two companies is for a period of five years.
Santoso added that PGN "plans to acquire working interests in two or three gas
blocks" in Indonesia. "We do not need (to participate) as a majority
(stakeholder) but may become a minority partner" to secure gas supply needs, Santoso
said. He said PGN "will invest in blocks that are already producing, or in which 75%
of reserves are proven."
PGN, which holds a monopoly on gas distribution in Indonesia, will likely require 4
million tons of LNG next year, 50% to 60% higher than projected demand this year, Santoso
said. He added that PGN's annual LNG demand could rise further to 7 million tons by
2015.
Energy World estimates Sengkang to hold 406 billion standard cubic feet of proven and
provable natural gas reserves, 152 billion of which are to be used at a power station
located at the development, with the remainder to be used to produce liquefied natural
gas, according to an industry journal.