Bakrie will go ahead with its Kalimantan-Java pipeline plan

PT Bakrie and Brothers said Thursday that it would go ahead with its plan to build a gas pipeline from Bontang, East Kalimantan to Semarang, Central Java despite the government's statement that the undersea pipeline project is not economically viable, Investor Daily reported Friday.

"We will go ahead with the plan as the government has not made any decision on the cancellation of the project," the company's director and corporate secretary Juliandus Tobing was quoted as saying by the newspaper.

He denied that the project was not economically viable because it was tendered by the government after a comprehensive assessment on the feasibility of the project. "Bakrie joined the tender based on assumption and data provided by BPH Migas (the regulatory body in charge of oil and gas downstream industry," he said.

Asked if Bakrie had received a license to carry out the project, Juliandus said it was not relevant any more for the company to obtain the license for the construction of the project because it had obtained the special project to build the pipeline through the tender process.

He also said that the government's statement saying that the project was not economically viable indicated the inconsistency of its policy, which could discourage foreign investors.

Regarding the reports that the project was not viable because of the lack of gas supply, Juliandus said that Bakrie hoped the government would be able to use gas production in Kalimantan for domestic use as most of the gas production in the province is processed into liquefied natural gas (LNG) for exports.

Meanwhile, Downstream oil and gas authority BPH Migas will set a deadline for Bakrie & Brothers to secure natural gas supplies for its planned pipeline network that will transport natural gas from East Kalimantan to East Java.

?I shall summon (the management of) Bakrie & Brothers. If it is unable to secure gas supplies within a timeframe, we shall review (the contract),? BPH Migas? chairman Tubagus Haryono said on Thursday. He, however, did not specify the timeframe.

Tubagus also said on Thursday that the agency had only declared Bakrie as ?the winner? in the tender for the construction of the East Kalimantan-East Java pipeline, but still withheld the right to build the pipeline.

He noted that Bakrie had yet to obtain a gas transmission and distribution business license from the government. (*)