Asean Energy ministers sign MOU on regional gas pipeline

Energy ministers from Southeast Asia signed a memorandum of understanding Friday to push ahead with a $7 billion natural gas pipeline project in a bid to alleviate concerns over oil supply shortages and to improve economic development, Dow Jones Newswire reported.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said a masterplan on the project has been completed, and a council will soon be established to oversee the completion of the gas grid.

Purnomo said more than 1,000 kilometers of the grid has already been constructed. The Association of Southeast Asian Nations, or Asean, has identified the need for 4,500 kilometers of pipeline to complete the project, although this is closer to 6,000 kilometers when including the new Indonesian domestic pipelines needed.

Purnomo said Indonesia will be a major player in the trans-Asean gas pipeline project because of its enormous gas reserves.

"This project can be seen as a major achievement," Purnomo said at the opening of the 20th Asean Ministers of Energy meeting in Bali, Indonesia's resort island province.

The pipeline project was instigated because of concerns among Asean members of threats to long-term oil supplies.

While many Western countries have large oil stockpiles that can be tapped in case of unexpected supply disruptions, Southeast Asian nations don't have such ready reserves.

Asean members have previously said that a regional natural gas pipeline, as well as electricity networks, are the most efficient way for Asean countries to prevent a future energy crisis.

Indonesia has already developed several pipelines - from West Natuna to Singapore, West Natuna to Malaysia, and from South Sumatra to both Singapore and Malaysia. It is also studying a possible pipeline from West Natuna to Thailand.

"Building the infrastructure is important, not only to supply the gas, but also to create economic activities along the line, and to get the multiplier effect," Purnomo later told reporters.

Power Grid Plan

Under the memorandum of understanding, Asean members will develop regulations and frameworks for the cross-border supply, transportation and distribution of natural gas throughout the region.

This will be supervised by the soon-to-be established Asean Gas Consultative Council.

Asean has previously said the key reason behind the gas grid is the need to provide a backup of energy sources for Asean members, and to also reduce the consumption of oil because it remains a volatile commodity and is being depleted throughout the region.

Asean expects most countries in the region to become net oil importers within the next 10 years.

The gas grid is expected to be completed by 2020.

The ministers Friday also endorsed policy initiatives on the Asean power grid project, and agreed to develop a policy framework on regional electricity interconnection. A regional masterplan on the power grid will be completed in March 2003.

Currently, lower voltage connections exist between Singapore and Malaysia, Malaysia and Thailand, Laos and Thailand and Thailand and Cambodia.

Energy ministers from Thailand, Myanmar, Cambodia, Laos, Vietnam and a representative from the southern Chinese province of Yunnan will later this year sign an MOU to construct a regional power network and trading system.

Philippines Energy Department Secretary Vincent S. Perez said the two projects will help "narrow the development gap within and among Asean member countries and between Asean and the rest of the world."

Myanmar Deputy Energy Minister Brigadier General Thein Aung said the projects will help the region achieve sustainable economic growth, greater economic integration and competitiveness.

Asean comprises Cambodia, Brunei, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, Vietnam and the Philippines. (*)