ASEAN closer to building $7 billion gas network gas network
The Jakarta Post, Nusa Dua, Bali
The Association of Southeast Asian Nations (ASEAN) has come closer to the realization of an ambitious plan to building a US$7 billion gas pipeline crossing the region as the energy ministers of the regional block signed a memorandum of understanding for the giant project on Friday.
For the ASEAN member countries, which mostly lack oil resources, the pipeline network, if it materializes, will cut their dependence on oil and secure the energy supplies necessary for their economic development in the coming decades.
As far as Indonesia is concerned, the development of the project, dubbed the Trans-ASEAN grid, will give it an opportunity to sell its abundant gas resources, most of which remain untapped given the non-existence of distribution networks.
"This project can be seen as an achievement," Minister of Energy and Mineral Resources Purnomo Yusgiantoro told reporters at the opening of the 20th ASEAN Ministers of Energy meeting here.
Indonesia, which has seen its oil resources become much depleted and has rarely discovered significant new oil resources over the past several decades, now pins much hope on its gas resources for earnings to help rebuild its economy, now severely battered due to the economic crisis.
Indonesia is estimated to still have more than 130 trillion cubic feet of gas, according to the government data. Today, Indonesia sends its gas in the form of liquefied natural gas (LNG) to Japan, South Korea and Taiwan, and via pipeline to Singapore and Malaysia.
Indonesia has developed or is developing several pipelines -- from the West Natuna area in South China Sea to Singapore, from West Natuna to Malaysia, and from South Sumatra to both Singapore and Malaysia. It is also studying a possible pipeline from East Natuna to Thailand.
The East Natuna area, considered to be one of the world's largest gas fields with reserves of up to 43 trillion cubic feet, is projected to become one of the main suppliers of gas to the region.
Aside from the Natuna area, Indonesia has also discovered gas in East Kalimantan, Sumatra, Sulawesi and Papua.
Purnomo said a masterplan for the project has been completed, and a council, called the ASEAN Gas Consultative Council, would soon be established to oversee the completion of the gas grid.
The master plan has identified seven gas interconnections covering a length of 4,500 kilometers that need to be built. The total investment involved is estimated at $7 billion.
"This investment figure will only cover the cross-border gas pipelines, and excludes the cost of the internal gas pipelines, which will be developed by the individual countries," Purnomo added.
Under the MOU, ASEAN members will develop regulations and frameworks for the cross-border supply, transportation and distribution of natural gas throughout the region.
The gas grid is expected to be completed by 2020.
Purnomo admitted that Indonesia, despite being a big gas exporter, still used only a small amount of gas. But, he predicted people would shift from oil to gas in the near future.
"Currently people prefer to use oil-based fuel instead of natural gas because oil fuel is still subsidized by the government. But when the subsidy is lifted in 2004, it will hopefully trigger the use of natural gas," he said.
During the Friday meeting, the energy ministers also agreed to develop the so-called ASEAN Power Grid, which will integrate the power infrastructure of ASEAN member countries.
Purnomo said that the master plan study for the ASEAN Power Grid would be completed in March 2003.
The meeting was opened by President Megawati Soekarnoputri, who in her speech stressed the importance of energy availability for the region.
The Friday meeting also reviewed and endorsed steps to be taken by the ASEAN members to promote and encourage increased utilization of new and renewable energy resources in the region.