Habibie may cancel gas project dedication

Habibie may cancel gas project dedication

JAKARTA (JP): President B.J. Habibie may back out of the
dedication of a gas pipeline in central Sumatra owned by state
gas distribution company PT PGN in the wake of a land dispute
involving one of its clients.

Habibie is scheduled to dedicate operations of the pipeline on
Thursday from the Bina Graha presidential office here.

PGN president Qoyum Tjandranegara said on Tuesday: "We are
still waiting for confirmation from the (presidential) palace."

Scheduled to give a news briefing on Tuesday morning to
explain the dedication ceremony, Qoyum arrived several hours
late. He explained he had been called to an "emergency" meeting
at state oil and gas company Pertamina's office concerning the
ceremony.

He refused to reveal its results.

PGN has completed development of the 536-kilometer pipeline
for the transmission of gas from the Grissik gas fields in South
Sumatra, owned by Canada's Gulf Resources, to the Duri oil field
in Riau, owned by PT Caltex Pacific Indonesia.

However, PT Sentosa Mulia Bahagia recently accused Gulf of
using 57 hectares of its land in South Sumatra for the
development of its gas pipelines without providing compensation,
which the company said amounted to at least Rp 16 million (US$2
million).

Qoyum said the dispute had nothing to do with PGN because the
pipeline developed on the disputed land was considered Gulf's
property.

He added that PGN appropriated about 1,600 hectares of land
for the development of its gas pipelines and it paid full
compensation to landowners.

Minister of Mines and Energy Kuntoro Mangkusubroto admitted
the dedication of the gas pipeline project remained uncertain.

"I am waiting for Bina Graha to make its decision," Kuntoro
said on Tuesday.

Qoyum said the operation of the pipeline would not be affected
by Habibie's decision either way.

He said the state company had been operating its pipeline
since Oct. 1 and operations were running smoothly.

The pipeline currently transmits 82 million cubic feet per day
(MMSCFD) of natural gas from Gulf's gas fields in Grissik to the
Duri oil field. Its planned peak load is 310 MMSCFD.

PGN receives a toll fee of 62 U.S. cents per million British
thermal unit (MMBTU) from Gulf for the transmission of the gas.

In Duri, the gas is used to replace crude oil used by Caltex
to pump out crude from oil wells.

Caltex earlier burned 50,000 barrels per day (bpd) of crude
oil to pump the Duri oil wells. Gulf will receive 50,000 bpd of
crude oil per day from Caltex in exchange for the gas.

PGN received project financing of US$360 million from Asian
Development Bank (ADB), Japan Export Import bank (JEXIM) and Euro
Development Bank (EDB).

PGN only used $231 million of the fund, thanks to its
efficiency program and the transparency of the tender for the
project. (jsk/prb)