Pertamina delays Semarang, Gresik gas pipeline project

The Jakarta Post, Jakarta

State oil and gas firm PT Pertamina has delayed the construction of the US$179.7 million gas pipeline linking Semarang in Central Java and Gresik, East Java, due to a lack of gas supplies.

Pertamina president director Ari Sumarno said Friday that his company was still awaiting gas supplies from the Cepu block.

"If there is no gas, how can we build it?" Ari said, adding that Pertamina planned to propose an extension to the deadline for the commencement of construction, which was due to start this year.

Ari also said that Pertamina had still to find buyers for the future gas supplies.

Downstream oil and gas regulatory agency, BPH Migas, named Pertamina as the winner of the Semarang-Gresik gas pipeline project in March 2006. Based on the contract, Pertamina was required to start construction this year, and was given two-and-a-half years to finish the 250-kilometer pipeline.

The pipeline, which will transmit between 350 and 500 million standard cubic feet of gas per day (MMSCFD), is intended to deliver gas from the Cepu block, which straddles the border between East and Central Java, and contains an estimated 1.7 trillion cubic feet of gas

Pertamina and the world's largest oil company, ExxonMobil, which jointly operate the Cepu block, had expected gas production to begin by 2009.

Ari said that the Semarang-Gresik pipeline would connect with the South Sumatra-West Java pipeline, and formed part of the government's master plan to establish a national gas pipeline linking Sumatra, Kalimantan and Java.

Separately, state-owned gas distributor PT Perusahaan Gas Negara (PGN) said it had delayed the commercial operation of two South Sumatra-West Java pipelines.

PGN is building two pipelines from gas-rich South Sumatra to Java, where demand is rising after high crude prices forced factories to switch to alternative fuels, including coal and gas.

The first pipeline from Grissik was scheduled to be completed in March 2007, and the second, transporting gas from Pagardewa, was expected to start operations in November last year.

PGN president Sutikno told Bloomberg on Friday that PGN would start piping gas from Pagardewa to customers in Cilegon in western Java at a rate of up to 40 million cubic feet a day in mid-February, instead of November.

The second pipeline would likely start transporting gas from fields in Grissik operated by ConocoPhillips in May, two months behind schedule, Sutikno added. --JP/Ika Krismantari
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