Investors eye natural gas distribution business

Investors eye natural gas distribution business

Fitri Wulandari
The Jakarta Post
Jakarta

Malaysia's state energy company Petronas is one of many
investors interested in entering the natural gas distribution
sector in this country, a senior official said.

Tubagus Haryono, the head of Oil and Gas Downstream Regulatory
Body (BPH Migas), which oversees oil and gas refining activities,
said Petronas representatives had informal talks with the agency
about entering the business.

"They came about two weeks ago and said they were interested
in natural gas distribution, particularly in Java," Tubagus said.

Three local companies had made presentations detailing their
business plans while a dozen other companies had held talks with
the agency.

"Natural gas distribution is a promising business because of
increasing demand for the fuel," Tubagus said.

The three investors who had made presentations were PT
Banten Inti Gasindo, which plans to distribute natural gas for
Banten and Cilegon areas; PT I Gas for Cikarang region; and PT
Energi Timur Jauh for gas distribution in East Java.

Packed with industry and densely populated, demand for natural
gas in Java continue to increase. A report by consultant company
PT Pendawa shows natural gas demand in Java would grow by between
4.9 percent to 8.3 percent annually if the country's economy grew
by 3 percent to 6 percent.

The study said natural gas demand would reach up to 2.4
billion standard cubic feet a day (BSCFD) by 2010 and to 6 BSCFD
by 2025. In 2002 demand for the fuel stood at 1.48 BSCFD.

However, low natural gas resources and a lack of
infrastructure has impeded wider use of the fuel.

Tubagus said the agency would give licenses to investors based
on their financial and technical ability along with what return
they could promise on their investment.

"It is important to prevent the license from being transferred
or sold from one companies to another," Tubagus said.

Once an investor got a license it would hold sole rights to
distribute natural gas along a pipeline in certain areas for a
limited period.

However, the existing pipeline was open to any natural gas
distribution companies which wished to use the network and pay a
leasing fee.

At the moment, only state natural gas distributor PT
Perusahaan Gas Negara (PGN) has been involved in the business.

The company plans to construct a 1,780 kilometer natural gas
transmission pipeline to connect natural gas resources in East
Kalimantan with markets in Java.