Duri-Dumai gas pipeline project starts construction

Deputy Minister of Energy and Mineral Resources Arcandra Tahar led on Monday a groundbreaking ceremony to mark the start of construction of the Duri-Dumai gas pipeline project in Riau Province, and witnessed the signing of gas transportation and sales and purchase agreements.

The ministry said in a statement that the ceremony was held at the ministry relayed via video conference with two project locations in Dumai: the Dumai Refinery Unit II of state-owned oil and gas firm PT Pertamina, and the Off Take Station (OTS) Dumai of state-controlled gas distribution firm PT PGN.

The ministry assigned in June 2016 the two state firms to develop the gas pipeline project, which was followed with the signing of heads of agreement by the two firms on June 9, 2017. On July 27, Pertamina transferred the HoA to subsidiary PT Pertagas. On November 10, PGN and Pertagas signed a joint operation agreement (or KSO), under which Pertagas holds a 60 percent interest of the pipeline project, and PGN 40 percent.

The Duri-Dumi gas pipeline will have a diameter of 24 inches, and total length of 60 km with tie-in starting point at the Duri Meter Station of the Grissik-Duri pipeline (owned by PT TGI) and final point at Pertamina Refinery Unit II Dumai. Gas distributed via the pipeline will be owned by both Pertamina and PGN, with gas supplies coming from Corridor block operated by ConocoPhillips, Bentu block operated by PT Energi Mega Persada Tbk, and Jambi Merang block operated by JOB Pertamina-Talisman.

The Duri-Dumai pipeline will transmit gas to the Pertamina Dumai Refinery, to industries in Riau, to the port, and to petrochemical industry. Gas allocated for the Dumai refinery can be used for the conversion of fuel oil into gas which can potentially increase the refinery production capacity, with gas demand of 57 mmscfd and will increase gradually to 120 mmscfd.

Total investment requirement of the pipeline project is estimated at US$52.2 million. The project is targeted to be completed in 11 months so that it can start operation in October of 2018.

Arcandra also witnessed the submission of document on the transfer of operatorship of Jambaran Tiung Biru (JTB) field from ExxonMobil to Pertamina EP Cepu, and the signing of gas transportation and sales and purchase agreements including JTB gas sales and purchase agreement between Pertamina EP Cepu and PT Pertamina EP, and with PT Pertamina; firm gas transportation agreement (FGTA) for Duri-Dumai pipeline from Grissik (South Sumatra) to Duri (Riau) between PT TGI and PT PGN.

Elsewhere, the statement said that regarding JTB field development project, construction process has started following groundbreaking led by Minister of Energy and Mineral Resources on September 25. Gas from the JTB field of 172 mmscfd will be distributed to PLN Gresik (100 mmscfd) and industries in Central and East Java (72 mmscfd). The estimated US$1.547 field development and $515 million pipeline projects are targeted for completion in 2021.

Under the FGTA between TGI and PGN, TGI as the owner of the Duri-Grissik pipeline will distribute gas owned by PGN from receiving point at Grissik, of which the gas supply will come for Corridor block, to the delivery point in Duri for the Duri-Dumai pipeline project. The volume of gas to be transported will ramp up to 37 mmscfd, from October 2018 until December 2023.

Editing by Reiner Simanjuntak