Bakrie may get right to develop Kepodang-Tambak Lorok pipeline

Politically-connected conglomerate Bakrie Group will likely be given right to develop gas pipeline that would connect Petronas-operated Muriah block offshore East Java to Tambak Lorok power plant in Central Java owned by state electricity firm PLN, a top official downstream regulatory body BPH Migas said on Wednesday.

Upstream oil, gas authority BPMIGAS, Director General of Oil and Gas and BPH MIGAS has agreed to give recommendation to the Minister of Energy and Mineral Resources that the 200-km pipeline would be built using downstream scheme, potentially reversing earlier decree issued by the Minister that the pipe be built by Petronas using upstream scheme.

Tubagus said that the recommendation was based on consideration that downstream scheme would give greater revenue to the government as pipeline development costs would not be put under cost recovery scheme and it would open way to develop marginal gas fields along the pipeline.

Bakrie Group, which had been awarded right to develop Kalimantan to Central Java pipeline contested decision that the pipeline segment would be developed under upstream scheme by Petronas, arguing that the Muria-Kepodang segment was part of Kalimantan to Central Java pipeline.

The decision would mean that Petronas or PLN would have to pay toll fee to use the pipeline. Petronas is contracted to supply 200 MMCFD from Kepodang field in Muriah block to Tambak Lorok for 10 years.

Earlier, BPMIGAS Deputy Chairman Hardiono said that developing the pipeline under downstream scheme would mean project delay of about one year as addition equipments must be installed at the well head. (bernard)