Gas pipeline project must be tendered out: Aburizal<\/p>\n
Leony Aurora, The Jakarta Post, Jakarta<\/p>\n
The massive pipeline project connecting gas-rich Kalimantan to
\nJava must be tendered out, the Coordinating Minister for the
\nEconomy says, negating an earlier agreement made by the Vice
\nPresident and a huge Chinese oil and gas company.<\/p>\n
Putting his support behind the Downstream Oil and Gas
\nRegulatory Agency (BPH Migas), Aburizal Bakrie said on Wednesday
\nthat the Committee for Policies on the Acceleration of
\nInfrastructure Construction (KKPPI), which he chairs, had decided
\nthat the project would be tendered out last month.<\/p>\n
\"The tender will be conducted by BPH Migas and the person in
\ncharge of the process is BPH Migas chairman (Tubagus Haryono),\"
\nAburizal said at an exhibition on alternative energy here.<\/p>\n
Although Aburizal said the decision had been taken a month
\nago, there has been a heated debate during the past two months
\nabout whether the project would be tendered out or given directly
\nto state gas distributor PT Perusahaan Gas Negara (PGN), which
\nhad offered to undertake the project in partnership with the
\nChina National Offshore Oil Corporation (CNOOC).<\/p>\n
The debate started in late August when PGN signed a memorandum
\nof understanding with CNOOC witnessed by Vice President Jusuf
\nKalla to build the gas transmission line.<\/p>\n
PGN said the Chinese company was ready to finance the US$1.2
\nbillion project.<\/p>\n
Later, Tubagus requested a letter from the Ministry of Energy
\nand Mineral Resources affirming that the agency would tender out
\nfor the 1,200-kilometer long pipeline project.<\/p>\n
\"The energy minister (Purnomo Yugiantoro) sent a letter on
\nOct. 17 to the coordinating economics minister in support of us
\nconducting the tender,\" Tubagus said.<\/p>\n
Purnomo, who also attended the exhibition, said the
\ninfrastructure acceleration committee would have the final say on
\nthe project.<\/p>\n
He said the ministry would give a recommendation based on a
\nfeasibility study of the transmission line. The study, conducted
\nby BPH Migas, is expected to be completed late this year.<\/p>\n
Critics have urged the government to reconsider whether the
\npipeline would be the best means to bring gas from the aging
\nfields in Kalimantan to Java, where the use of the
\nenvironmentally-friendly fuel is low due to a lack of
\ninfrastructure.<\/p>\n
A liquefied natural gas (LNG) terminal might prove to be a
\nbetter option, they said, because if gas ran out in Kalimantan,
\nthe terminal could still receive supplies from other areas,
\nwhereas a pipeline would become a rusting hulk at the bottom of
\nthe sea.<\/p>\n
State power firm PT Perusahaan Listrik Negara (PLN) is
\nplanning to construct an LNG terminal in West Java, which would
\nstart operation in 2009.<\/p>\n
Aburizal remained firm that the supply from Kalimantan would
\nbe sufficient. \"Gas contractors there now don't produce as much
\nbecause they cannot channel the output,\" he said.<\/p>\n
Indonesia will have to cut LNG exports by 10 percent next year
\ndue to lower production in Kalimantan and Aceh.<\/p>\n
The government has been forced to cut supplies equal to 30
\ncargoes or 1.8 million metric tons of LNG to contracted buyers
\nfrom the country's plant in Bontang, East Kalimantan -- the
\nlarger of the two plants operating here -- from the ordered 370
\ncargoes.<\/p>\n
The Upstream Oil and Gas Regulatory Agency (BP Migas) said
\nlast week that the nation's gas production was in decline and the
\nnew reserves recently found in Kalimantan were not as big as
\nexpected.<\/p>",
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"sponsor": "Okusi Associates",
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