Indonesian integrated gas development: Fact or fiction?<\/p>\n
Mustain Sjadzali, Chairman, Indonesian Pipeline Industry Association,
\nJakarta, citra@indo.net.id<\/p>\n
At a dimly lit top-secret operation room somewhere in the
\nCaucasus Mountains, the pipeline route is displayed on a large
\nscreen against a map of the central area region. A tense group of
\npeople fix their gaze on the two flashing icons moving along the
\nline, the points of drama.<\/p>\n
Inside that pipe, hurtling at 70 mph through a claustrophobic
\ntube just 48 inch in diameter and thousands of miles long, is
\nPierce Brosnan (Bond, James Bond) astride an intelligent pig (a
\ncontraption shaped like a cannon shell, that monitors, inspects,
\nand records the internal conditions of a pipeline, inserted in a
\npipe, propelled by gas behind it) accompanied by the beautiful
\nDr. Christmas Jones, an atomic physicist on assignment to
\ndismantle a nuclear test-site in Kazakhstan, whom he had recently
\nbefriended. They are in hot pursuit to intercept a similar rig.
\nThe passenger on that one, a nuclear bomb.<\/p>\n
Contact is made, and the lovely Doctor removes the plutonium
\nleaving a small detonator. Brosnan and partner dismounts just in
\ntime, the bomb goes off further down the line, severing the pipe,
\ncreating an exit. And later they emerge out of the pipeline in
\nthe middle of nowhere, still in his Saville Row attire, a few
\nsmudges on his handsome face. Unshaken, unstirred. Once again
\nBond is about to save the free world. This time from the evil
\nintent of the seductive industrialist Electra King (Sophie
\nMarceau), who alternates between being appealing and appalling.
\nShe built and owns the pipeline. Combined with her devious scheme
\nshe is convinced of her potential global dominance. Or at least
\nregional influence. For her, The World is Not Enough.<\/p>\n
Seldom is a pipeline publicly raised to that level of drama,
\nsignificance and glamour. That line, may or may not exist, but it
\ncertainly provides a compelling rationale for one.<\/p>\n
Strategic pipelines between Kazakhstan and Russia, Turkey,
\nGeorgia, and across Iran have been laid. Just eastwards a large
\npipeline has just been completed between Kazakhstan and China.<\/p>\n
Looming in our horizon is the Trans ASEAN Gas Pipeline (TAGP).
\nLinking gas production centers with markets within Asean
\ncountries offers solid logic.<\/p>\n
The undertaking is massive, but legs of the grand plan are the
\nexisting cross border linkages already in place and those being
\nconstructed between Malaysia to Singapore, Malaysia to Thailand,
\nBurma to Thailand, Indonesia to Singapore and Malaysia.<\/p>\n
Sitting on over half of the gas reserves in the region,
\nIndonesia is considered as the main supply hub.<\/p>\n
TAGP envisions an evolutionary development with national gas
\ngrids as basic building blocks. Within that scheme, in the case
\nof Indonesia, the Grissik - Duri (540km) line is the first to be
\nin place, with the spur line to Batam, and Singapore currently
\nunderway. And none too soon.<\/p>\n
Even within the Indonesian archipelago, gas is not evenly
\ndistributed between source of supply (Kalimantan and Sumatra) and
\ndemand (the industrialized and populous East and West Java).<\/p>\n
Images of brown-outs and high cost of liquid fuels for power
\ngeneration looms in the immediate future. Not to mention gas as
\nan ideal substitute for oil which can be easily exported for
\nvaluable foreign currency.<\/p>\n
For sure, plans, schemes and diagrams of the 3600 km pipeline
\n(that have become wall posters which all pipeline practitioners
\nare able draw with their eyes closed) have been around for at
\nleast two decades.<\/p>\n
So is this another one of those pipe dreams, which is only
\nslowly, ever so slowly, becoming real?<\/p>\n
Enter reformasi. Even with all its shortcomings, the
\ngovernment and Pertamina have put profound and earnest efforts to
\nderegulate the once stifling oil and gas regulatory regime.<\/p>\n
The long awaited and newly passed oil and gas bill in
\nprinciple enables the private sector to participate in
\ndeveloping, building, owning and operating pipelines.<\/p>\n
However, a healthy market still needs to be developed since
\nregional pipelines face a vicious circle. Gas pipelines won't be
\nlaid until strong and steady demand exists, while users will be
\nslow to convert and invest in gas usage as long as the supply and
\nprice remain uncertain, and to some, confusing.<\/p>\n
Compounded onto that are other concurrent events and phenomena
\nin this country. The economic crisis nearly paralyzed the
\nfinancial sector. Reformasi inspired regional autonomy and with
\nit, its inherent stability issues. Investment climates, rule of
\nlaw, sanctity of contracts.<\/p>\n
To be fair, referring to the Central Asia region that is no
\nless politically challenged, there is more transmission pipelines
\nper capita in place than in Indonesia.<\/p>\n
But if we are to catch up for lost time, and opportunity,
\nthese issues will have to be addressed, head on. Only then
\ninvestors, domestic and especially foreign will come.<\/p>\n
It would be ideal to have a clear and coherent National Gas
\nDevelopment Master Plan, and the collective political will to
\nmake it happen.<\/p>\n
After all Indonesia is still one of the largest exporters of
\nLNG in the world. More importantly oil and gas will be the main
\ndriver of this country's economic recovery.<\/p>\n
Indeed ever since oil was first discovered in Telaga Said in
\n1885, and Indonesia became a petroleum producing country,
\npipelines became intertwined with the subsequent development, and
\nwhich at times saw, rapid growth of the oil and gas industry in
\nthis Asian region.<\/p>\n
Considering the number of oil companies, from Pertamina,
\nproduction sharing contractors, then PGN (the state gas company),
\nit is natural that thousands of kilometers of various pipelines
\nranging from collection lines, flowlines, trunklines and
\ntransmission have covered hydrocarbon regions and traversed the
\ncountry.<\/p>\n
The numerous pipelines built over the years have left a
\nsubstantial body of knowledge, know-how and skill amongst
\npractitioners.<\/p>\n
They become valuable assets and contribute much towards the
\noperation and reputation of both national as well as
\ninternational construction companies operating in this country.<\/p>\n
National construction companies though are disadvantaged by
\nthe depressed volume and continuity of domestic pipeline work in
\nrecent years. So the coming prospects do bring excitement to the
\nindustry. Although the lack of financial and banking support
\navailable is still a major handicap.<\/p>\n
If the spirit of ASEAN togetherness is to be sought and
\nmanifested through the various aspects surrounding the Trans
\nAsean Pipeline then cooperation between regional contractors
\ncould be put on the agenda to enhance equitable distribution of
\nopportunities within member states.<\/p>\n
Even pipeline manufacturers in Indonesia with a combined
\ncapacity of more than 600,000 metric tons per year production of
\nAPI (American Petroleum Institute) standard are currently running
\nat 10 percent capacity.<\/p>\n
All dressed up, and nowhere to go, they are eager, ready and
\nwaiting. Their history and development has not been a happy one.<\/p>\n
As an example, having to import steel plates, their product
\nprices are at the mercy of some of their competitors with their
\nintegrated steel industries.<\/p>\n
Domestic manufacturers argue that after navigating through the
\nquagmire of import duties applied to their raw material and
\nexemption for buyers, tariffs, VAT on pricing, domestic
\npreferences etc, they actually end up at a disadvantage.<\/p>\n
Their greatest challenge would be, besides improving their
\ntechnical and operational efficiency, is to search and exhaust
\nways and means and apply the remaining instruments available and
\nwithin the rules of current international trade to put themselves
\non a more level playing field.<\/p>\n
An ASEAN integrated pipeline network ideally would call on an
\nequally integrated approach from all concerned working towards an
\nequitable distribution of participation and benefit to the
\ngovernments, producers, users, and members of the pipeline
\nindustry community.<\/p>\n
If there are encouraging signs in that general direction, then
\nit would be the time to remove the Britney Spears as well as 007
\nblockbuster movie posters on the wall to once again reveal that
\ninfamous poster of the Indonesian Integrated Gas Grid, and savor
\nthe renewed anticipation.<\/p>\n
The writer is also President of PT Citra Panji Manunggal, a
\npipeline construction company.<\/p>",
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