Govt to get huge revenue from gas pipeline project<\/p>\n
Fitri Wulandari, The Jakarta Post, Jakarta<\/p>\n
The government is projected to receive around US$11 billion in
\nrevenue for 20 years from the massive gas pipeline project
\nlinking East Kalimantan with the heavily populated Java island,
\naccording to a feasibility study report.<\/p>\n
The government's portion represents 36 percent of the total
\n$31.1 billion in revenue expected from the gas pipeline project,
\nwhich will start operation in 2008, said the report, made by
\nconsulting firm PT Pendawa.<\/p>\n
\"The government would get the bulk of the revenue,\" WMP
\nSimanjuntak, president of state-owned natural gas distribution
\ncompany PT Perusahaan Gas Negara (PGN) said on Thursday.<\/p>\n
PGN will start construction of the 1,780-kilometer pipeline in
\n2005. The pipeline will distribute gas from producers in East
\nKalimantan mainly to industrial users in East Java and West Java.
\nAccording to the study, the gas producers will be charged a toll
\nfee of 89 U.S. cents per metric cubic feet (MCF) of gas
\ndistributed through the pipeline.<\/p>\n
The study also said that 27 percent of the revenue would go to
\nthe investors financing the project, while the remaining 37
\npercent would be used to pay costs.<\/p>\n
The pipeline project would be carried out in two phases.
\nFirst, constructing a 1,100-kilometer transmission pipeline from
\nEast Kalimantan to East Java, with a planned capacity of between
\n700 million cubic feet per day (MMSCFD) and 1,000 MMSCFD.<\/p>\n
The second phase would be the construction of a 680-kilometer
\ntransmission pipeline from East Java to West Java, with a planned
\ncapacity of between 300 MMSCFD and 350 MMSCFD.<\/p>\n
The project requires an estimated investment of around $1.7
\nbillion.<\/p>\n
Simanjuntak said PGN would try to get commercial loans of
\naround $1.2 billion, while the remaining $500 million would be
\nfrom PGN's own equity, investors and multilateral lenders.<\/p>\n
He added that PGN had approached companies who operate natural
\ngas fields in East Kalimantan asking them to sell their gas to
\nPGN.<\/p>\n
Iin Arifin Takhyan, director general of oil and gas at the
\nMinistry of Energy and Mineral Resources said that the project
\nwas timely given the increasing demand for natural gas on Java
\nisland and the need to replace oil as fuel.<\/p>\n
The report said, that if the country's economy grew at between
\n3 to 6 percent, natural gas demand in Java would also grow by
\nbetween 4.9 percent to 8.3 percent annually.<\/p>\n
The study projects gas demand in Java would reach between 1.8
\nbillion cubic feet per day (BSCFD) to 2.4 BSCFD by 2010 and
\nbetween 3 BSCFD to 6 BSCFD by 2025.<\/p>\n
Natural gas demand in Java in 2002 was 1.48 BSCFD, mostly for
\npower plants and industry. Major natural gas consumers in Java
\ninclude steel company PT Krakatau Steel, fertilizer company PT
\nPupuk Kujang, Muara Karang and Muara Tawar power plants.<\/p>\n
Despite plenty of natural gas resources around Java,
\nthe supply would not be able to keep up with the surging demand,
\naccording to the report.<\/p>\n
Previously, Simanjuntak had said that developing a natural gas
\ntransmission pipeline was economically viable as one option for
\ntackling the lingering fuel-shortage problem in Java.<\/p>\n
Compared to liquefied natural gas (LNG), natural gas
\ndistribution through a pipeline is less costly as there is no
\nneed to build an LNG terminal. Natural gas can be distributed
\ndirectly through a pipeline straight to consumers.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-to-get-huge-revenue-from-gas-pipeline-project-1447893297",
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