BPH Migas ready to face KPPU on gas transmission line

BPH Migas ready to face KPPU on gas transmission line

Leony Aurora and Anissa S. Febrina, The Jakarta Post, Jakarta

Downstream Oil and Gas Regulatory Agency (BPH Migas) is ready to
go to the Business Competition Supervisory Agency (KPPU) should
any party impose itself in obtaining a special license on a
pipeline project connecting gas-rich Kalimantan and densely-
populated Java without going though a tender process.

By regulation, the special right to operate the pipeline --
meaning that no other company is allowed to build a pipeline
connecting similar areas -- should be conducted through tender,
chairman of BPH Migas Tubagus Haryono told reporters on Tuesday.

"We may not tender the pipeline, if the network's status in
the ministerial decree is adjusted accordingly to dedicated
upstream (pipeline) or dedicated downstream," he said, referring
to pipelines that are built and operated by gas producers or by
end consumers, respectively.

"We have spoken with the KPPU regarding this matter," he said.

The US$1.2 billion project, spanning 1,200 kilometers from
East Kalimantan to Central Java, is in the middle of a tug-of-war
between BPH Migas, which is tasked with conducting tenders for
the pipeline, and state gas distributor PT Perusahaan Gas Negara
(PGN), which has requested that it be appointed as the special
right holder.

PGN has signed a memorandum of understanding (MOU) with the
China National Offshore Oil Corporation (CNOOC), which is ready
to fund the pipeline.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said it would be up to the Committee on Policies on Acceleration
of the Construction of Infrastructure (KKPPI) if the gas
transmission line fell through.

"We are just requesting that if it goes through, it has to be
done through tender," he said.

The ministry is currently conducting a feasibility study,
which is expected to be completed at the end of this year, he
added.

The Upstream Oil and Gas Regulatory Agency (BP Migas) recently
warned that the pipeline project should be studied further to
determine whether it was the best option to bring gas from
Kalimantan to Java.

BP Migas' deputy of marketing and finance Eddy Purwanto said
last week that the government should consider bringing in the gas
as liquefied natural gas (LNG) to a receiving terminal that would
be built by state power firm PT Perusahaan Listrik Negara (PLN)
in West Java.

If gas runs out in Kalimantan, the terminal will be able to
take LNG from other sources, even from abroad, whereas the
pipeline would lay idle at the bottom of the sea, he said.

Indonesia is seeking to speed up the construction of its gas
infrastructure to reduce domestic oil-based fuel consumption.

The Kalimantan-Java pipeline is part of the so-called
Integrated Indonesian Gas Pipeline (IIGP) projects, which will
distribute gas from production points in East Kalimantan, South
Sumatra, Riau and East Java to industrial and household consumers
in Java and Sumatra.

The projects, which are estimated to cost some $3 billion with
a combined transmission length of over 2,000 kilometers, are
expected to be completed by 2009.