Firms bid for gas pipeline projects
Leony Aurora, The Jakarta Post/Jakarta
Seven companies, including state gas distributor PT Perusahaan Gas Negara (PGN) and the local unit of the U.S.' largest construction company, Fluor Corp., have registered to bid for two gas pipeline projects in Java.
The government has opened the tender process and expects to announce the winners in March 2006, chairman of the Oil and Gas Downstream Regulatory Agency (BPH Migas) Tubagus Haryono said on Friday.
The two projects connect Gresik in East Java and Semarang, and Semarang and Cirebon, West Java, respectively.
Aside from PGN and PT Fluor Daniel Indonesia, PT Moeladi, PT Rekayasa Industri, PT Punj Lloyd, PT Giga Intrax and PT Agung Mindosungkul will also participate in the bidding process.
Three other prominent companies -- state oil and gas firm PT Pertamina, Malaysia's Petroliam Nasional Bhd., and Japan's Mitsubishi -- are also reported to have shown interest in the projects.
Tender winners will be given special rights on the routes they have been awarded, meaning that no other companies will be allowed to build pipelines connecting the same cities. The special rights will be valid for 25 years, said Tubagus.
The company will construct the pipelines, bear the cost and charge other parties for transporting gas through the pipe.
"One of the requirement for the winner is the lowest toll fee," he said.
The pipelines are expected to channel gas to meet the demand in densely-populated Java from newly developed gas fields operated by Santos offshore Madura, an island off East Java, ExxonMobil in Madura and Amerada Hess in Ujung Pangkah, also in East Java.
With the pipeline from Gresik to Semarang expected to stretch 390 kilometers and the one from Semarang to Cirebon 290 kilometers, the pipelines will have the capacity to carry between 350 million standard cubic feet (mmscf) and 500 mmscf. Combined, the estimated cost of the projects is estimated at Rp 6 trillion (about US$612 million).
Tubagus said BPH Migas would also put a 120-kilometer pipeline out to tender to connect Bekasi and Cirebon, both in West Java.
"We will open the tender for that segment later this year," he said.
Indonesia, with gas reserves of 188.34 trillion scf, has some of the most extensive reserves in the world. Lack of infrastructure connecting gas-rich areas with Java has hampered the use of the environmentally-friendly fuel in households and small industries.
The government hopes that the development of a gas network in Java to transport gas from South Sumatra and Kalimantan will reduce the use of subsidized fuel.
Java and Bali account for some 62 percent of the country's domestic fuel consumption, while Sumatra uses 20 percent and the rest of the archipelago the other 18 percent.