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.