Singaporean energy conglomerate Sembcorp has announced a $1.41bn agreement with Indonesian oil and gas company PT Medco Energi Internasional to import natural gas.

The western portion of Indonesia’s Natuna gas fields will source the gas throughout the four years of the deal. The Gas Sales Agreement will come into effect in the second half of 2023, with the provision of gas expected in 2024.

PT Medco owns 25% of the West Natuna gas pipeline, which connects south Asia’s largest field with Singapore. The Natuna gas field is estimated to contain 46 trillion cubic feet of recoverable natural gas reserves.

Sembcorp was the first company to import natural gas into the country and has utilised the West Natuna pipeline since 2001.

A key terms sheet was signed for the deal in 2022, making it the second import agreement between the two companies.

Although it is increasing its natural gas commitments, Sembcorp has recently reaffirmed its dedication to aiding Singapore’s energy transition. In a joint statement following the company’s annual report for 2022, Sembcorp CEO Wong Kim Yin and chairman Ang Kong Hua said: “As the leading producer of renewable energy and the largest importer of natural gas in Singapore, we are well positioned to support the government’s ambition to develop hydrogen as a major decarbonisation pathway.”

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In the first quarter of 2023, PT Medco produced 165 million barrels of oil equivalent (boe) per day. This was higher than the estimated 160 million, with a 30% year-on-year increase. The company also invested $47m (Rp699.57bn) in its gas projects in the Natuna Sea region. The company’s oil production costs fell $1.4/boe to $6.2/boe in the first quarter of 2022.