Sembcorp Gas Pte Ltd, a subsidiary of Singapore-based energy firm Sembcorp Industries, has signed an agreement to import natural gas from Medco E&P Natuna Ltd, a unit of Indonesian oil and gas company PT Medco Energi Internasional Tbk, according to a recent press release. .
The deal to import natural gas from the West Natuna gas fields in Indonesia is valued at US$1.41 billion (SGD1.9 billion), Sembcorp said in the statement. The company expects the agreement to enter into force in the second half of 2023, subject to the necessary agreements to transport the new gas supply. Delivery is expected to begin in 2024 over a four-year period, according to the statement.
According to an investor presentation by PT Medco, the West Natuna transportation system is a 403.9-mile (650-kilometer) natural gas pipeline that serves gas sales from three offshore production facilities from South Natuna near Indonesia to a ground reception facility in Singapore.
PT Medco reported oil and gas production of 163,000 barrels of oil equivalent per day (boepd) for 2022, up 73 percent year-on-year, according to its 2022 earnings release. In the first quarter 2023 oil and gas production was 165,000 boepd, up 30 percent year-on-year.
PT Medco’s oil and gas capital expenditure (CAPEX) for 2022 of $269 million, which will be mainly used to start up two new Natuna gas development projects. In the first quarter of 2023, the company’s CAPEX was $47 million, also to advance new development projects.
Sembcorp said the deal complements its existing natural gas supply from piped and liquefied sources, enabling it to “maintain its position as Singapore’s leading natural gas importer”.
The deal is not expected to have a material impact on the company’s earnings per share and net tangible assets per share for the current fiscal year, Sembcorp said.
Sembcorp oversaw the first delivery of natural gas to Singapore from Indonesia in 2001, with an initial agreement for 325 million standard cubic feet per day of natural gas sent to Singapore over 22 years, also delivered via the West Natuna pipeline, according to Sembcorp.
Focused on renewables
In its 2022 annual report, Semcorp said it is continuing to build its renewable energy portfolio, securing 3.6 gigawatts (GW) of renewable capacity through acquisitions and organic growth last year. The company said it was “well-positioned to support the government’s ambition to develop hydrogen as the main route to decarbonisation”, as it has “a key role in the production of green hydrogen”.
In a results statement, Sembcorp said it made a group net profit “before exceptional items” of $654.71 million (SGD883 million) for the 2022 fiscal year, up from 349, $97 million (SGD 472 million) from the previous fiscal year, due to higher contributions from its Conventional and Renewable Energy segments. Sembcorp Chairman and CEO Wong Kim Yun said the company’s gross renewable energy portfolio grew to 9.8 GW by 2022, nearly meeting the company’s target of 10 GW of gross renewable energy capacity installed in 2025.
The Singapore company closed the sale of Sembcorp Energy India Limited in January 2023.
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