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Oil, gas projects worth Rp 10.8t in pipeline
The Energy and Mineral Resources Ministry has proposed that a number of oil and gas infrastructure projects be developed within the next few years and be funded by the state budget to build a better distribution system
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The Energy and Mineral Resources Ministry has proposed that a number of oil and gas infrastructure projects be developed within the next few years and be funded by the state budget to build a better distribution system.
The ministry has obtained an agreement in principal from the House of Representatives' Commission VII overseeing the energy sector for the plan, which will see seven projects worth a total of Rp 10.8 trillion (US$839.04 million) being developed.
'There is no infrastructure project that can be completed in one year. Therefore, permission to execute these [projects] over several years is needed. We will communicate with the Finance Ministry to get the green light,' Energy and Mineral Resources Minister Sudirman Said said.
The government will directly appoint state-owned enterprises to work on several projects, he added.
The state budget now has more fiscal room to be injected into the oil and gas infrastructure development projects thanks to the government's fuel subsidy overhaul, which scrapped almost Rp 200 trillion worth of subsidy spending from the budget.
Out of the total seven, the biggest project ' in terms of investment value ' is the development of a gas pipeline connecting Semarang in Central Java to Cirebon in West Java to finally reach a Balongan refinery in West Java.
The pipeline will be part of the Trans Java pipeline, connected to the current Gresik-Semarang pipeline that is being developed to connect East Java and Central Java.
The development of the roughly 255-kilometer Semarang-Cirebon pipeline has been planned since a few years ago. However, development is currently stalled partly because the developer, PT Rekayasa Industri (Rekind), remains uncertain about securing gas supply. Last year, Rekind, which won the Semarang-Cirebon pipeline tender, reportedly returned its rights to develop the pipeline to the government.
The Energy and Mineral Resources Ministry is seeking a way to take over development rights from Rekind and to directly appoint state oil and gas giant PT Pertamina to work on the project without having to hold another tender, said director general for oil and gas IGN Wiratmaja.
'Another tender only takes time. We are planning to assign Pertamina and use the state fund as the government's injection to Pertamina to develop the pipeline. It is necessary because the gas pipeline will support industry growth particularly in Central and East Java,' Wiratmadja said.
Pertamina's subsidiary, PT Pertamina Gas (Pertagas), is currently developing the Gresik-Semarang pipeline. Appointing Pertamina for the project will allow the company work on the Trans Java pipeline.
Wiratmadja said the gas supply for the Semarang-Cirebon-Balongan pipeline would be secure because in line with the development, several other projects would also be performed, including a planned development of a floating storage and regasification unit (FSRU) in Central Java by Pertamina. The FSRU is expected to be able to receive and transform liquefied gas back into gas, which is sent from several fields in the country.
Another influential oil and gas infrastructure developments in the pipeline is the development of a 130-km pipeline connecting Balikpapan and Samarinda in resource-rich East Kalimantan.
'We will build an energy artery in East Kalimantan, which has abundant gas resources even though industry has yet to grow there. The pipeline will connect Samarinda to Balikpapan to Handil, from where it can be connected to existing pipelines, including the one to Bontang,' Wiratmaja said.
