National Gas Pipeline Network (Image Source : BPH Migas)

JAKARTA (TheInsiderStories) – As a move to increase domestic usage of natural gas, the Downstream Oil & gas Regulatory Body, will tender out three gas pipelines in 2018, with a combined length of 1,667 kilometers. The development of the gas infrastructure is in line with the national gas development masterplan.

Head of the agency Fanshurullah Asa explained that the three gas pipeline networks consist of Natuna-West Kalimantan pipeline, 487 kilometers long, with an estimated cost of US$565 million, West Kalimantan to Central Kalimantan, with a length of 1,018 km, at $516.4 million, and Central Kalimantan along 162 km to South Kalimantan, for an investment of $97 million.

“The total investment will reach $1.25 billion. This is a huge outlay for our downstream oil & gas sector,” admitted Fanshurullah.

Once completed, the three large western islands – Sumatra, Kalimantan and Java – will be connected with gas pipelines: Natuna to Kalimantan and then Kalimantan to Java, through the so-called Kalimantan-Jawa or ‘Kalija’ gas pipeline.

The gas pipeline projects are likely to benefit pipe producers such as KHI Pipe Industries, a subsidiary of steel maker PT Krakatau Steel Tbk (IDX:KRAS), PT Bakrie Pipe Industries, PT Steel Pipe of Indonesia Tbk (IDX: ISSP) and others.

Fanshurullah said the feasibility study and the development of these three pipeline projects will be handed over to state-owned or private sector companies.

Development of the gas pipeline is in line with the government’s drive to increase the use of natural gas, considered cleaner than oil. Currently, Indonesia exports a major portion of its domestically-produced natural gas, due to a lack of support infrastructure. The development of the new gas pipeline network will help boost domestic consumption of natural gas.

In addition to the above three gas pipeline projects, the government will also develop a pipeline from Cirebon in West Java to Semarang in Central Java, along with the second-phase of the Kalija pipeline and gas pipeline in South Sumatra. The Cirebon-Semarang gas pipeline is being developed by PT Pertagas, a subsidiary of state-owned energy company PT Pertamina.

In September of last year, PT Sarana Pembangunan Jawa Tengah, a company owned by the Central Java provincial government, signed an agreement with EPC firm PT Rekayasa Industri, a unit of fertilizer firm PT Pupuk Indonesia, to develop a 235-kilometer gas pipeline linking Cirebon in West Java and Semarang in Central Java.

Construction is scheduled to be completed in 33 months or by 2020. The gas pipeline will have the capacity to transport 250-300 million standard cubic feet per day (MMSCFD) of gas, and will be operated by Rekind in cooperation with Pertagas. The gas supply is expected to meet growing demand from industries and households in Central Java.

Groundbreaking for the Cirebon-Semarang gas pipeline is scheduled to be held in July 2018, said Fashurullah.

The first and second phases of Kalija gas pipeline are in fact a long-delayed project. Bakrie Group won the tender to develop the gas pipeline in 2006; however, until now the group has yet to develop the second phase, connecting Java and Kalimantan.  BPH Migas has reprimanded Bakrie over the delay of the project.

Written by Staff Writer, edited by Roffie Kurniawan, email: roffien@theinsiderstories.com

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