RI to launch its second transnational gas pipeline
Evi Mariani, The Jakarta Post, Jakarta
State-owned gas distribution and marketing company PT PGN announced here on Tuesday the completion of the Sumatra-Singapore gas pipeline project that will allow Indonesia to boost its gas exports to the neighboring country.
The pipeline is also expected to become an embryo for the planned gas pipeline network crossing all the member countries of the Association of Southeast Asian Nations (ASEAN).
President Megawati Soekarnoputri is scheduled to inaugurate the startup of the pipeline on Aug. 4 on Batam island, Riau, in a ceremony expected to include Singapore Prime Minister Goh Chok Tong and ASEAN's energy ministers.
The new pipeline is the second linking Singapore and the Indonesian territory after the Natuna-Singapore pipeline, which started operation in 2000.
The new pipeline stretches about 470 kilometers from Grissik in South Sumatra to Singapore's Sakra island, passing Sakernan in Jambi and Batam. Of the total length, 206 kilometers are built overland and the remaining 264 kilometers are underwater.
The project's cost reached $420 million, including $88 million in loans from the Asian Development Bank (ADB) and $112 million in loans from the European Investment Bank. The remaining $220 million is covered by PGN along with some strategic investors.
The pipeline will carry gas supplies from gas fields in the Corridor Block and South Jambi Block, operated by ConocoPhillips, and the gas fields in Jabung Block operated by Petro China, to PowerGas Ltd, a subsidiary of Singapore Power, in Sakra Island.
Initially, they will supply 150 million metric standard cubic feet per day (MMSCFD) of natural gas. The volume will gradually be increased to more than 350 MMSCFD.
PowerGas will use the gas supplies for its power plants and industries.
Under the deal signed in 2001, the gas supply will generate a total revenue of US$9 billion throughout the contract period of 20 years.
Since gas is cheaper than diesel oil, the pipeline will also bring benefits to the industries in Batam as they can now buy cheaper fuel for their operations. State-owned electricity company PT PLN can also cut costs by using gas at its power plant on the island.
PGN's president director Washington M.P. Simandjuntak told a media briefing that the development of the pipeline started in February 2001 and was completed on schedule.
The completion of the project is expected to boost PGN's profile as the state company is preparing to issue bonds worth $500 million and to offer a maximum 49 percent of its shares to the public in November.
Following the completion of the pipeline project, Indonesian gas producers can explore the opportunities to send gas to Malaysia or Myanmar.
Thus, he said, the pipeline could give an impetus for ASEAN member countries to realize their plans of building the Trans ASEAN Gas Pipeline.
ASEAN has long planned to build a gas pipeline network crossing the region with most of the gas supplies expected from Sumatra and Natuna islands.
Since 2000, Indonesia supplies Singapore with 325 MMCFD of gas from the western part of Natuna through a 656-kilometer underwater pipeline.
Aside from sending gas through pipelines, Indonesia also exports gas in the form of liquefied natural gas (LNG) to South Korea, Japan and Taiwan. Indonesia is now the world's largest LNG exporter with a total export of more than 30 million tons per year.