Nine companies given permits to distribute gas

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