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.