PGN builds gas distribution network
JAKARTA (JP): The state-owned gas distribution company Perusahaan Gas Negara (PGN) is investing a total of US$1.27 billion to expand its gas distribution network in Sumatra, Java and Sulawesi, the company said yesterday.
The coordinating executive of the Indonesia Gas Transmission Project at PGN, Adil Abas, said the funding was allocated for three gas pipeline projects in the three islands.
Adil said the first project would development a gas distribution network from the gas field operated by Asamera in Gersik, Musi Banyuasin, South Sumatra to the Caltex oilfield project in Duri, Riau and to Batam island, also in Riau.
The 544 kilometer Gersik-Duri pipeline would deliver 310 million cubic feet per day (MMCFD) of natural gas from Asamera's gas field to Duri, and another 275 MMCFD of gas to Batam.
In Duri, Caltex would use the gas to replace the use of crude oil in pumping crude oil wells, while in Batam, the gas would be marketed to industries.
The distribution of the gas from Batam was still being considered, Adil said.
"The development of the pipeline from Gersik to Duri started early this year and is scheduled for completion by the middle of next year," Adil said at a workshop on the company, organized by the company and the Jakarta branch of the Indonesian Journalists Association.
"The gas pipeline to Batam will be tendered early next year," he added.
Adil said the pipeline linking Gersik and Duri would branch out in Sekernan, South Sumatra to continue to Batam with a distance of 400 km, of which 200 km would be underwater.
He said PGN would invest $590 million for the development of the Gersik-Duri-Batam pipeline. The money was provided as a soft loan by the Asian Development Bank, JEXIM, the European Investment Bank (EIB) and the World Bank.
The second pipeline project would develop pipelines connecting South Sumatra to West Java.
A pipeline would be built along the distance of 520 km from Gersik to Prabumulih, South Sumatra to Cilegon in West Java to deliver 250 MMFCD of gas.
Another pipeline would be built to deliver gas over 280 km from Cilegon to the industrial complex in Subang, also in West Java.
"West Java is a big potential market with a demand of between 600 MMFCD and 700 MMFCD of gas," said Adil.
The South Sumatra-West Java gas pipeline project would be financed with a soft loan of $600 million from the ADB and the World Bank, he said.
Adil said the financiers had been committed to the project and would make an appraisal in February 1998.
The construction of the South Sumatra-West Java gas pipeline project is scheduled to start in 1999 and to be completed in 2001.
The third project PGN plans to develop until the year 2000 would be the 300 km gas pipeline in South Sulawesi from Sengkang to the province's capital of Ujung Pandang to supply 140 MMCFD.
The project cost is estimated by the ADB to cost $80 million.
"The financial appraisal will be made next January," Adil said.
Indonesia has 135.6 trillion standard cubic feet of natural gas resources, enough for 45 years of exploitation.
Government data states that 56 percent of the gas is turned into liquefied natural gas (LNG) for export and 19 percent for domestic sales for industrial, household, power generation and other purposes. (jsk)