Govt cancels Duri-Medan gas pipeline project

The government has cancelled a plan to build a 664-km gas pipeline linking Duri in Riau and Medan in North Sumatra and will instead build a floating gas terminal in Belawan, North Sumatra to cope with the gas shortage in the two provinces, Bisnis Indonesia reported Friday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Thursday that the construction of the pipeline was not economically viable because the lack of gas resources to provide the gas supply for the pipeline.

The minister said that the pipeline could only receive gas supply from Glagah Kambuna gas field (owned by Pertamina) and Anggor and Secanggang gas fields (owned by JoB Costa International Group Ltd.)

The pipeline could not receive gas supply from the Suban 3 gas block in South Sumatra as earlier planned as the gas production from the block had already been allocated to supply the gas needs of Chevron Pacific Indonesia, he said.

?It is almost certain that the plan to build the Duri-Medan gas pipeline will be cancelled and to be replaced by a floating gas terminal,? he said.

The government has appointed state owned gas distribution company PT Perusahaan Gas Negara to build the pipeline. The company has begun the preparation for the construction of the gas pipeline since three years ago. (*)