B

akrie and Brothers (BNBR) is set to continue the construction of the 200-kilometer gas pipeline connecting the Kepodang field to state-owned PT PLN’s Tambaklorok steam gas power plant.

The publicly listed diversified investment firm, which owns all of Bakrie’s business enterprises, signed the gas transportation agreement (GTA) for the project with Malaysia’s Petronas Carigali Muriah Ltd. — the oil and gas field’s operator — and PLN in Jakarta on Monday. BNBR president director Bobby Gafur Umar said the company would start the tender process for the project’s engineering, procurement and construction (EPC) in the first quarter of 2013.

“The firm is now working on the Amdal [environmental impact analysis] and the engineering permits for the project before moving on to the procurement of the pipelines and beginning construction.”

Under the GTA, the toll fee for the gas to be distributed along the pipeline will be US 37 cents per million metric British thermal units (mmbtu). Meanwhile, the price of gas at the well head was agreed between Petronas and PLN at $4.61 per mmbtu in July this year. BNBR, Bobby said, would spend around $175 million on the pipeline project, which is expected to have the capacity to distribute as much as 180 million standard cubic feet per day (mmscfd).

By late 2014, the amount of gas to be distributed will be 116 mmscfd from the Kepodang field, which is located in the Muriah oil and gas block in offshore North Java operated by Petronas, to the 1,000-megawatt (MW) Tambaklorok plant, located in Semarang, Central Java.

The Kepodang-Tambaklorok project will be the first stage of the company’s Kalimantan-Java gas pipeline network project, which will comprise as much as 1,200 kilometers of new, planned pipelines.

The project itself has been delayed for years, as the initial plan was for Petronas to build the pipeline under the upstream scheme. However, in 2009, the concession holder for the Kalimantan-Java pipeline, BNBR, wanted to incorporate the Kepodang-Tambaklorok pipeline into the Kalija project under the downstream scheme.

The Energy and Mineral Resources Ministry approved BNBR’s bid in 2010, saying it would produce greater revenue for the country as the government would not pay back the construction cost as fixed in the “cost recovery” regulation.