T

he planned construction of a 255-kilometer gas pipeline connecting Cirebon, West Java, and Semarang, Central Java, is in limbo given uncertainty over gas supplies to feed the distribution network.

The project, part of the Transjava pipeline network, is still awaiting confirmation on the gas supply, according to Ibrahim Hasyim from the Downstream Oil and Gas Regulatory Agency (BPH Migas).

'€œ[Construction] on the gas pipeline can only be done if there is clarity and assurance on the gas supply. We will discuss the matter with all related stakeholders,'€ Ibrahim said on Thursday.

The Cirebon-Semarang development project is granted to PT Rekayasa Industri and is expected to cost around US$400 million. No construction work has been started, but preparations, including for the engineering design, have been taken, Ibrahim said.

He denied speculation that the lack of clarity on the gas supply would cause Rekayasa Industri to withdraw from the project.

Rekayasa Industri declined to comment on the matter.

The Upstream Oil And Gas Regulatory Special Task Force (SKKMigas), which has the authority to determine gas allocation, admitted that the allotment (for the Cirebeon-Semarang network) had not been made.

'€œThere has been no allocation yet because there is no gas source that can be allotted for the pipe, except if the planned FSRU [floating storage regasification unit] in offshore Semarang is utilized to supply the pipe,'€ SKKMigas deputy for commercialization control Widhyawan Prawiraatmaja said.

The planned development of the Semarang FSRU is part of an expansion plan of state-owned oil and gas giant PT Pertamina.

The FSRU will require a gas supply of 1.5 million tons per year. Apart from the Semarang FSRU, Pertamina is also planning to build a smaller vessel in offshore Cilacap, also in Central Java.

However, the development of these projects depends on gas supply certainty.

In April last year, SKKMigas said it had sent a letter to the Energy and Mineral Resources Ministry about its plan to allocate gas for the Semarang FSRU. According to the letter, the allocation will come from the Tangguh train 3 liquefied natural gas (LNG) plant in West Papua as well as gas produced from deepwater development projects run by Chevron and ENI.

The Tangguh train 3 development is in progress and is expected to start production in 2019. ENI recently said it had started engineering, procurement, construction and installation (EPCI) and expected to start production in 2016. Meanwhile, Chevron'€™s deepwater project remains uncertain.

Despite the letter of gas allocation, Pertamina said no gas supply had been secured.

'€œThere'€™s still uncertainty over the gas allocation. If there is already an allocation, we will build both of the FSRUs,'€ Pertamina director for gas Hary Karyuliarto said in a text message.

The country is struggling to realize a bigger domestic gas consumption as part of its attempt to reduce the import of oil and its products, which has hurt its balance.

Most of the country'€™s production is sold overseas as domestic consumption is hampered by poor distribution infrastructure and facilities.