ASEAN gas grid project develops slowly

ASEAN gas grid project develops slowly

Cameron Dueck, Reuters, Singapore

Southeast Asian states are slowly putting together the pieces
of a US$6 billion gas pipeline network that will harness the
region's rich reserves and alleviate dependence on imported oil.

The Trans-ASEAN Gas Pipeline plan, linking supply to demand
centers in Malaysia, Singapore, Indonesia, the Philippines,
Myanmar, Vietnam and Thailand, was first proposed in 1996 with a
$15 billion price tag.

Five years on, the plan has been downsized and proposed
investment slashed by more than half. ASEAN states are due to
sign a memorandum of understanding for the proposal in July 2002.

Analysts and industry officials say regional demand, driven by
gas-fired power generation, should be strong enough to create
many of the smaller spurs and links by 2007. But political and
economic issues could delay completion for decades.

"The main idea for the grid is to supply gas to power plants
within the region," said Guillermo Balce, executive director of
the ASEAN Centre for Energy (ACE) in Jakarta.

"The bigger links will take some time to develop, towards 2010
or even later. Especially because the key to the major links is
East Natuna," Balce told Reuters.

The Asia-Pacific region contains 10.33 trillion cubic metres
of proven gas reserves, or just under seven percent of the world
total, according to the 2001 issue of the BP Statistical Review.

Malaysia and Indonesia hold the largest single reserves at
2.31 and 2.05 tcm respectively, making up about 42 percent of the
regional total.

"Southeast Asia is a self-contained market for supplies and
consumption of gas. It is a region where there is not one major
gas supply field. Each market has its adjacent supply," said
Gavin Thompson, Asia Pacific energy consultant with Wood
Mackenzie in Edinburgh.

Initial Trans-ASEAN pipeline plans five years ago were greeted
with skepticism as more of a politically-led drive rather than a
sound economic and commercial plan.

But single pipelines have sprouted up as gas markets have
developed, laying the framework for a region-wide gas grid to
grow organically.

Under the new plan, seven pipeline projects are slated for
commissioning between 2002 and 2016 with Indonesia's Natuna gas
fields in the South China Sea playing a central role.

Major links would include a line from East Natuna to Erawan,
Thailand via the Joint Development Area (JDA) in the Gulf of
Thailand and a pipeline from East Natuna to Kerteh, Malaysia via
the West Natuna field.

West Natuna also will be connected to Malaysia via a pipeline
to the offshore Duyong gas facility. The JDA is slated to link to
Vietnam's Block B gas field in the Gulf of Thailand.

The longest development would be a 1,540-kilometer pipeline
from East Natuna to the main island in the Philippines, Luzon,
via Sabah in East Malaysia and the Malampaya field off the
Philippine island of Palawan.