Gulf optimistic PGN can complete pipeline project

Oil and gas firm Gulf Indonesia Resources is optimistic that the state-owned gas distribution company PGN can complete a 470 km gas pipeline project to allow gas delivery from South Sumatra to Singapore next year, the Neraca daily reported.

There has been concern that PGN might not be able to complete the US$477 million project on time due to financing difficulties especially after ADB criticized PGN for failing to meet the bank?s conditions, among others, finding a strategic investor.

But Neraca quoted Gulf Resources Indonesia vice president Supramu Santosa as saying that the Asian Development Bank was still committed to finance the project.

ADB is supposed to provide some $88 million in financing. The rest: $93 million will come from European Investment Bank, $150 million from the state-owned Bank Mandiri, and $196 million from PGN itself. But Neraca said that government guarantee from the Finance Ministry as demanded by Bank Mandiri is not yet available.

PGN is supposed to start the project next month.

Supramu is optimistic that the pipeline project can be completed in August 2003.

He said that it was in the interest of all parties that the project must not be delayed or failed as it does not only concern penalty but also confidence in the country.

The gas to Singapore will come from the Corridor Block in South Sumatra, operated by Gulf.(*)