Gas pipeline bids to end in November

Gas pipeline bids to end in November

Leony Aurora, The Jakarta Post/Jakarta

The government expects the bidding for two gas pipeline projects
in Java to be completed in November, with the construction to
start early next year, a top official says.

Chairman of the Oil and Gas Downstream Regulatory Agency (BPH
Migas) Tubagus Haryono said on Friday that several companies,
including state oil and gas firm PT Pertamina and state gas
distributor PT Perusahaan Gas Negara (PGN), would be ready to
take part in the bidding process.

"We will shortlist the bidders, probably three of them," he
said. "We expect to announce the winner six months from now, in
November. While construction will start soon after the winner is
announced."

The government will open a bid for two pipeline projects,
namely the 390-kilometer-long pipeline from Gresik in East Java
to Semarang in Central Java and another 290-kilometer-long
pipeline from Semarang to Cirebon in West Java, later this month.

Each of the pipelines will carry about 350 million standard
cubic feet of gas per day. Combined, the projects are estimated
to cost up to Rp 6 trillion (US$631.25 million).

The pipelines are expected to channel gas to fulfill demand in
Java, where gas is used by industries as well as households, from
newly developed gas fields operated by Santos in offshore Madura,
an island off East Java, ExxonMobil in Madura, and Amerada Hess
in Ujung Pangkah in the province.

"After these pipelines, we'll probable tender out the segments
in Sumatra," said Tubagus.

"Java is the most important (to cover), as it has the most
fuel consumers," he added. "If fuel in Java could be replaced by
gas, we would achieve at least some energy diversification."

Heavily populated islands of Java and Bali consume 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.

With a reserve of 188.34 trillion standard cubic feet,
Indonesia is known to have one of the most extensive gas reserves
in the world. However, lack of infrastructure has hampered the
use of gas in households and small industries.

The government plans to gradually cut the use of oil from 60
percent of the country's total energy use to 30 percent by 2025.
The government plans for gas and coal to make up 60 percent of
energy use in the future while other energy the remaining 10
percent.