Megawati to launch major oil, gas projects

Fitri Wulandari, The Jakarta Post, Jakarta

President Megawati Soekarnoputri is set to launch 14 oil and gas projects worth US$1.9 billion, signaling an improved investment climate in the sector.

Four of the projects have been completed, while the other 10 will start development soon.

The projects consist of 12 projects worth $940 million owned by state oil and gas firm Pertamina, one worth $485 million owned by state gas distribution firm PT Perusahaan Gas Nasional (PGN) and one worth $551 million owned by oil and gas upstream authority BP Migas and French oil and gas company Total E&P Indonesie.

"The projects are a milestone to increase investment in the oil and gas sector. They are expected to improve investor confidence that the investment climate in the sector is still good," Minister of Energy and Mineral Resources Purnomo Yusgiantoro told a media briefing on Wednesday.

Purnomo added the projects could eventually boost the country's growth by "increasing revenue, boosting the economy in the regions and producing environmentally friendly oil and gas."

Megawati is scheduled to launch the projects at the Balongan oil refinery in Indramayu, West Java, on Sept. 14.

Four projects that have been completed are: Cemara mini liquefied petroleum gas (LPG) refinery, Indramayu; East Limau LPG mini-refinery, South Sumatra; the CO2 removal facility in Subang, West Java; and the compression facility of the Tunu gas fields in East Kalimantan.

The first three are owned by Pertamina, while the other is a joint project of BP Migas and Total E&P Indonesie.

Pertamina director for downstream oil and gas business Muchsin Bahar said the LPG projects were meant to reduce Pertamina's dependence on LPG imports.

Muchsin said the projects were to anticipate increasing demands for LPG in the future.

LPG is widely used by middle- and high-income households nationwide, with consumption reaching about one million metric tons per year. In Jakarta alone, some 200,000 households use LPG.

The ten projects, whose development will be launched by the President, include Pertamina's Plaju liquefied natural gas (LNG) plant in South Sumatra, Pertamina's unleaded gasoline plant at the Balongan refinery, PGN's gas pipeline transmission from Pagardewa, South Sumatra to Cilegon, West Java, and the procurement of two oil tankers owned by Pertamina. The 260,000 deadweight ton (dwt) tankers, categorized as very large crude carriers (VLCCs), each have a capacity of two million barrels of oil.