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After almost a year of
negotiations on energy cooperation
between Indonesia and South Korea, state-owned oil and gas firm
Pertamina and state power utility PLN are expected to sign contracts
worth US$1 billion with a number of South Korean companies during the
visit of President Susilo Bambang Yudhoyono to that country next week.
Pertamina president director Ari Sumarno said Friday that the state oil
company would sign a joint venture agreement with E1, a subsidiary of
South Korean conglomerate LG, to build a liquefied petroleum gas (LPG)
plant in South Sumatra.
The plant, which will be 66 percent owned by Pertamina and 34 percent
by E1, will cost up to $155 million to build and will have a designed
capacity of 350 million cubic feet per day.
The construction of the plant will begin in 2008, and commercial
production is expected to begin in the first half of 2010.
In the upstream sector, Pertamina will sign letters of intent (LoIs)
with the State-run Korea National Oil Corporation (KNOC) and energy
firm SK Corp. for joint exploration work in the eastern part of
Indonesia.
Ari said that the signing of the LoIs was a follow-up on the
Memorandums of Understanding (MoUs) signed by the companies during the
visit of a South Korean trade delegation to Jakarta in May.
Meanwhile, PLN will continue its discussions with Korea Electric Power
Corp. (Kepco) on the proposed construction of a gas-fired power plant
in Bojonegara, Banten, with an installed capacity of 750 megawatts (MW).
It is hoped that the plant will be able to be completed in 2009 or 2010.
Other projects that will be discussed include the proposed construction
of a 400-MW coal-fired power plant in West Bangko, South Sumatra and
the country's first direct coal liquefaction plant in East Kalimantan,
which will have a capacity of 5,000 barrels per day.
Thamrin Shite, a senior official at the Energy and Mineral Resources
Ministry said that the contracts to be signed with the South Korean
companies would be worth up to US$1 billion.
Next week's meeting will be the third between Indonesian and South
Korean representatives after South Korean President Roh Moo-hyun's
visit to Jakarta last year to initiate an extensive strategic
partnership between the two countries.
With its lack of energy and natural resources, South Korea is highly
dependent on imports, partly from resource-rich Indonesia, to meet its
energy needs.
South Korea, which imports 97 percent of its energy and resources
needs, is trying to secure fuel supplies amid rising competition from
other major importers, such as China and India.
According to figures from the Korean Commerce, Industry and Energy
Ministry, South Korean companies plan to invest a record $3.2 billion
in overseas oil and gas projects this year and $577 million in minerals.
South Korea imports about 24.6 million tons of liquefied natural gas a
year from Indonesia.
The northeast Asian country is Indonesia's fifth largest trading
partner, while Indonesia is Korea's ninth largest trading partner, with
the two-way trade volume amounting to $13.6 billion in 2006,
representing an increase of 2.7 percent from the $13.23 billion
recorded in 2005.
Bilateral trade in 2006 produced a surplus in Indonesia's favor of
about $3.8 billion.
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