Eric Watkins
Senior Correspondent

LOS ANGELES, Oct. 26 -- Indonesia will sign $10 billion worth of contracts next week at the Asia Pacific Oil & Gas Conference & Exhibition 2007 (APOGCE), according to a senior official.

Energy and Mineral Resources Ministry Sec. Gen. Waryono Karno said the contracts, to be witnessed by President Susilo Bambang Yudhoyono, would cover the financing and development of oil and gas projects, along with electric power projects and gas sales.

Waryono also said the government would offer 26 oil and gas blocks for tender, following a delay brought by discussion of cost recovery arrangements in the country's oil and gas industry.

The highest value deal to be signed involves sales agreements for gas worth an estimated $5.5 billion, while $1.2 billion will go on development of the Oyong and Ujung Pangkah oil and gas fields in East Java.

The Oyong field, operated by Santos Ltd., is expected to produce 6,000 b/d of oil, while Ujung Pangkah, operated by Hess Corp., is to produce 6,000 b/d of oil and 10 MMcfd of gas.

"We will also see the signing of the second-stage loan agreement for the Tangguh project which is worth $884 million," Waryono said, adding that the loan will be provided by a consortium of lenders led by China's Fujian Bank.

Earlier this year Kardaya Warnika, chairman of Indonesia's upstream oil and gas executive agency BP Migas, said construction on the Tangguh LNG facility was 70% complete, and startup is expected by fourth quarter 2008, if operator BP Indonesia receives further financing for the project (OGJ Online, Mar. 1, 2007).

A few months later, Indonesian state-owned banks Bank Mandiri and Bank Negara Indonesia were said to be seeking to join a new syndicate of lenders that intend to fund the remaining construction costs for the plant (OGJ Online, May 11, 2007).

Following that in June, Talisman Energy Inc. said it would challenge CNOOC Ltd. in a Texas court over the Chinese firm's 17% stake in the Tangguh project, which is expected to begin commercial LNG production in 2008-09 (OGJ Online, June 14, 2007).

Meanwhile, during APOGCE, state-owned electricity company PLN also expected to sign five power purchase agreements with independent electric power producers and agreements for the construction of five coal-powered plants.

The five new plants are in North Sumatra, 400 Mw, Lampung, 200 Mw, North Sulawesi, 50 Mw, Gorontalo, 50 Mw, and West Nusa Tenggara, 50 Mw.

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