Gas offered to reduce oil dependence<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Against a backdrop of rising domestic fuel prices, one feasible
\noption for the country to wean itself off its dependence on oil,
\nand thereby reduce fuel subsidy spending, would be to promote the
\nuse of natural gas, experts say.<\/p>\n
Energy sector observer Kurtubi said over the weekend that the
\nnation's dependence on oil had reached a worrying level with the
\ncountry having to import some 30 percent of its oil requirements
\nper year to meet domestic demand.<\/p>\n
\"The government has to realize that such a policy is costly.
\nIt is high time for the next government to start seriously
\nthinking about promoting the use of non-oil products, notably
\ngas, which we have in abundance,\" Kurtubi told The Jakarta Post.<\/p>\n
Data from the Ministry of Energy and Mineral Resources shows
\nthat as of the end of 2003 the country's gas reserves (proven and
\npotential) stood at 198.13 TCF, but these are still largely
\nuntapped due to the limited support infrastructure, including
\ndistribution and transmission lines.<\/p>\n
In 2003, the nation's total gas output by state oil and gas
\ncompany Pertamina and production sharing contractors reached a
\nmere 3.3 TCF, some 90 percent of which was exported.<\/p>\n
Extensive development of infrastructure is necessary in order
\nto boost the use of gas domestically in view of the fact that the
\nusers and potential users of the commodity are concentrated on
\nJava, while most gas is currently produced outside the island.<\/p>\n
Kurtubi's remarks came amid a debate over whether or not the
\ngovernment needs to start raising selected fuel prices to reduce
\nfuel subsidy spending and ease the pressure on the state budget.<\/p>\n
Under the newly-approved revised 2004 state budget, fuel
\nsubsidy spending has been earmarked at a whooping Rp 59.2
\ntrillion -- which represents a more than 300 percent increase
\nfrom the initial target of Rp 14.4 trillion.<\/p>\n
Kardaya Warnika, deputy chairman of the oil and gas regulatory
\nbody, BP Migas, said that an increase in gas demand would come as
\nsoon as the government began cutting spending on fuel subsidies.<\/p>\n
The gradual slashing of fuel subsidies would then push the
\nprice of oil-based fuels up, forcing users -- both industrial
\nhousehold -- to seek alternative energy, such as gas, Kardaya
\nsaid.<\/p>\n
However, Kardaya admitted that it would take about three to
\nfive years to build and improve the infrastructure to make
\noptimize gas distribution.<\/p>\n
But, he was of the opinion that by rising fuel prices, which
\nwould eventually help boost demand for gas, would in turn draw
\nenough interest from investors, both domestic and foreign, to
\nstart investing to expand the current gas pipeline
\ninfrastructure.<\/p>\n
\"So, yes, it may take some time, but it is not too far away
\neither if we start now,\" Kurtubi said.<\/p>\n
Currently, state-owned PT Perusahaan Gas Negara, which
\ncontrols gas distribution in the country, only serves six cities
\n-- Medan, Palembang, Jakarta, Bogor, Cirebon and Surabaya.<\/p>\n
The firm plans to boost gas supplies to Surabaya, the
\ncountry's second largest city, from various fields offshore East
\nJava. It will find no difficulty in delivering the gas from these
\nfields as there is already a transmission pipeline linking Madura
\nisland to the city.<\/p>\n
PGN also plans to start supplying gas to Banten and West Java,
\nthe main industrial regions of the country. Given the lack of gas
\noutput in these regions, PGN plans to build a transmission
\npipeline linking them to gas-rich South Sumatra.<\/p>\n
Once the South Sumatra-West Java transmission pipeline is
\ncompleted in 2006, many industrial undertakings are expected to
\nswitch from oil to gas.<\/p>\n
Another potential gas supplier for Java is the Cepu block,
\nlocated in the border area between Central and East Java.
\nAmerican firm ExxonMobil has reportedly found huge gas reserves
\nin the area. However, ExxonMobil has postponed developing the
\nfields as the government has yet to approve its request for a
\ncontract extension.<\/p>",
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"sponsor": "Okusi Associates",
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