PGN aims to accelerate key pipeline project
Apriadi Gunawan, The Jakarta Post, Medan
State-owned gas distributor firm Perusahaan Gas Negara (PGN) said on Thursday it would complete its pipeline project linking Duri gas fields in Riau province with cities in North Sumatra sooner than expected, according to president director W.M.P Simanjuntak.
The project, which will connect 493 km of pipelines and cost some US$300 million, could be completed by July 2007 instead of December 2007 as it was set earlier, Simanjuntak said.
Not only as the firm would speed up construction process, it was also because it had officially secured both buyer and supplier of the natural gas to be transferred via the pipelines, he said after the signing of two agreements with Kondur Petroleum SA and Asahan Power Corporation Limited, respectively.
Under the agreements, signed on Thursday, PGN will buy up to 120 million cubic feet of natural gas a day from Kondur's plant in Duri and sell around 100 million cubic feet of which to Asahan Power.
Asahan Power will use the gas to supply its 600-megawatt power plant in North Sumatra, Simanjuntak said.
In the early stages, however, the pipelines would only transfer 80 million cubic feet of natural gas per day starting 2007 and would be gradually increased to 120 million cubic feet over 20 years.
"North Sumatra will be assured of a huge, and cheap, gas supply by the time this transmission pipelines project is completed," he told The Jakarta Post after the official signing ceremony.
Aside from Kondur field, the pipelines would also transfer natural gas from a number of gas fields along the pipelines which spans across four provinces; South Sumatra, Riau, Jambi and North Sumatra.
North Sumatra's Deputy Governor Rudolf Pardede, also present at the signing ceremony, said the completion of the pipelines would help boost the supply of gas in the province, which consumes some 470 million cubic feet of gas per day.
The Duri-Dumai-Medan transmission pipeline project forms part of the company's strategic planning to boost its sales to meet rising demand for cheaper fuel, as crude oil prices are surging to record high at the moment.
The company has said it expects to double its profit by 2007 as gas sales will increase to 650 million cubic feet a day from 280 million currently, as more people are turning to gas for fuel because it is cheaper than oil.
Currently, PGN , which controls gas distribution in the country, only serves six cities -- Medan, Palembang, Jakarta, Bogor, Cirebon and Surabaya.
It plans to boost gas supplies to Surabaya, the country's second largest city, from various fields offshore East Java.
PGN also plans to start supplying gas to Banten and West Java, the main industrial regions of the country. Given the lack of gas output in these regions, PGN plans to build a transmission pipeline linking them to gas-rich South Sumatra.
Once the South Sumatra-West Java transmission pipeline is completed in 2006, many industrial undertakings are expected to switch from oil to gas.