Trans-ASEAN gas pipeline faces huge challenges ahead
Trans-ASEAN gas pipeline faces huge challenges ahead
SINGAPORE (AFP): The initial links for a natural gas pipeline network across oil-dependent Southeast Asia are slowly being laid, but formidable challenges lie ahead, experts and officials said.
Completion of a 656-kilometer (406-mile) pipeline that began delivering natural gas from Indonesia's West Natuna fields to Singapore in January has rekindled hopes that the ambitious trans-ASEAN gas network will be realized by its target date of 2020.
Already, another high-pressure pipeline, spanning 500 kilometers (310 miles) to deliver natural gas from South Sumatra to Singapore would be completed by 2003.
Negotiations are in the works for a major gas supply deal between Indonesia and Malaysia expected by April.
These national and bilateral links are to be integrated into a 10 country regionwide network, which would complement a planned regional power grid, according to the plan.
"The trans-ASEAN gas pipeline will increase the security of natural gas supply within ASEAN (Association of Southeast Asian Nations)," Singapore Trade Minister George Yeo said at a recent energy conference here.
He expressed hope that Singapore's two multi-billion dollar natural gas deals with Indonesia "will take us a step closer towards the establishment of an ASEAN (gas) grid."
ASEAN groups 10 countries with diverse political systems, cultures and economies -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
With an estimated 227 trillion cubic feet of natural gas waiting to be tapped, ASEAN is well positioned to slash its dependence on imported oil.
Volatile oil prices have been a perennial worry for key ASEAN members, where crude cost adjustments are a politically sensitive issue.
However, challenges ranging from funding to cross border issues such as taxation, ownership, transit rights, third party access, pricing and harmonization of technical standards, needed to be resolved first, experts said.
Deregulation of national markets for gas and electricity is also a must, although such a move could be cumbersome because it requires legislation in many countries.
Mohamad Farid Amin, the lead coordinator of a task force for the pipeline, said they have come up with a draft memorandum of understanding that seeks to address these issues.
Energy ministers will review the draft before it is adopted by their respective governments.
Edu Hassing, a senior projects officer with the Asian Development Bank, said financing would be crucial as countries which have just emerged from a crippling economic crisis were unlikely to have the money for the projects.
Guillermo Balce, executive-director of the Jakarta-based ASEAN Center for Energy, estimates the pipeline network would need investments of at least 10 billion US dollars over the next 10 years.
Singapore's Yeo said government support "must be complemented by private sector participation to ensure that the projects proposed are commercially sensible and financially viable."
Conoco Indonesia Inc. of the United States, Canadian firm Gulf Resources Ltd. and Premier Oil Natuna Sea Ltd. of Britain ploughed about 1.5 billion US dollars for the Natuna-Singapore pipeline alone.
While the resources are abundant, Yeo said "we need to develop an efficient market for these resources and establish a regulatory structure and a cooperative framework which encourage private investment."
About 6,000 kilometers (3,720 miles) of pipelines are already in place within Southeast Asia, including a network linking Thailand to gas fields in the Gulf of Thailand. Another pipeline network allows Myanmar to deliver gas to Thailand.
Some 7,000 kilometers (4,340 miles) of pipelines are in the planning stage to complete the jigsaw puzzle, according to ASEAN figures.
Among them is a submarine pipeline from the Camago-Malampaya fields in the western Philippines to land gas on the main island of Luzon currently being built by a unit of the Royal Dutch Shell Group, and a network to bring gas from the South China Sea to industries in southern Vietnam.