Atlantic Richfield Co. said Tuesday it will spend as much as $3 billion to develop natural gas in Indonesia’s easternmost province, marking the company’s entry into the highly competitive business of supplying liquefied natural gas to Asia.
The area to be developed in Irian Jaya has estimated reserves of 13 trillion cubic feet of gas, making it Arco’s largest discovery outside the U.S. The project, which won’t add to Arco’s earnings until after 2000, will put the company in competition with Mobil Corp. of the U.S. and Total SA of France, which dominate the liquefied natural gas business in Asia.
The question, analysts said, is whether Arco will be able to realize good profits from the sale of the gas in Japan, Thailand, South Korea, India and other parts of Asia if all the competing projects expand supplies.
“The difficulty still lies ahead because the hard part with these projects is marketing the gas,” said Julia Nanay, an analyst at Petroleum Finance Co.
Liquefied natural gas, or LNG, is gas that’s liquefied through cooling so it can be stored and transported in special ships.
