Bakrie readies $145m to develop gas pipeline

IDX-listed diversified firm PT Bakrie & Brothers Tbk (BNBR) will spend US$145 million to build an under sea pipeline from Kepodang field offshore East Java to Tambak Lorok power plant in Central Java owned by state electricity firm PLN.

BNBR CEO Bobby Gafur Umar was quoted by Detik.com as saying that development of the pipeline will commence after Malaysain oil, gas firm Petronas which operates the block sign the GSA with PLN and gas transportation agreement the company. Construction will take 22 months to complete, he said, adding that BNBR will charge 37 US cents per MSCF.

Under the Petronas-PLN deal, the former will supply 200 MMCFD of gas to Tambak Lorok for 10 years.

Bobby said the 200-km pipeline section was considered part of East Kalimantan to Java pipeline concession it had won several years ago.

The Ministry of Energy and Mineral Resources has ruled that the Kepodang-Tambak Lorok pipeline be developed using downstream scheme, which will exclude cost of pipeline construction from cost recovery. Instead, producer will pay toll fee to transport the gas to consumer. (*)