Nine companies given permits to distribute gas
Fitri Wulandari, The Jakarta Post, Jakarta
The government has issued interim permits to nine companies to distribute natural gas for industrial consumers, a senior official said on Wednesday.
Head of Oil and Gas Downstream Business (BPH Migas) Tubagus Haryono said the permits were for trading and transporting natural gas through pipelines.
"The interim licenses are valid for two years, after which they can be converted to permanent ones," Tubagus said after a hearing with House of Representatives Commission VIII on mining and energy.
Tubagus said most of the companies operated in West Java, where industrial estates are located. However, he did not give details of the amount of investment planned by the companies.
Since most do not have infrastructure such as pipelines, they may use gas pipelines owned by state gas distribution firm PT Perusahaan Gas Negara, currently the only player in the sector.
"But a number of companies are not just traders but also transporters because they will build their own pipelines," Tubagus said.
BPH Migas will determine a transportation fee based on the region where the company is operating and the size of investment, Tubagus added.
Allowing investors to distribute natural gas would help secure regular supplies for industrial consumers, which have increasingly been attracted to natural gas because of its relatively lower price compared with oil-based fuel.
Meanwhile, the country's oil reserves are also declining.
Indonesia has proven oil reserves of 5 billion barrels, which are predicted to run out in 10 years at current production of 400 million barrels per year. Proven natural gas reserves stand at 90 trillion cubic feet (tcf) and will not be exhausted for 30 years at the current annual production rate of 3 tcf.
However, distribution and transmission of natural gas have been hampered due to a lack of infrastructure such as pipelines and liquefied natural gas (LNG) terminals.
Elsewhere, Tubagus said that an increasing number of companies had shown interest in investing in the country's downstream oil and gas sector.
U.S.-based ChevronTexaco and Total are among international companies that plan to enter the retail fuel sector, Tubagus said.
Previously, the government issued interim permits to seven companies to market oil-based fuel nationwide.
A temporary permit has also been issued to Nicor Lubrindo to build a fuel storage facility in Bojanegara, West Java, Tubagus added.
Private investors are allowed to engage in the distribution of oil and gas following the introduction of Law No. 22/2001 on oil and gas, which aims to liberalize the sector. For decades, the sector had been the monopoly of state oil and gas firm PT Pertamina.
Pertamina retains distribution of oil-based fuel until November 2005.
Gas distribution companies given permits
PT Energasindo Heksa Karya PT Igas Utama PT Mitra Energi Buana PT Rabana Gasindo Makmur PT Sadikun Niaga Mas Raya PT Banten Inti Gasindo PT Tata Kasih International PT Mitra Media Datanusa PT Persada Karya Dwiguna