Kalija II pipeline project likely to be discontinued

The 1,200-km Kalija phase II gas pipeline project, which was supposed to transmit gas from fields in East Kalimantan to markets in Java by connecting it with pipeline networks in the latter island, is likely to be discontinued as it has long been stalled since developer IDX-listed diversified engineering company PT Bakrie & Brothers Tbk won the project in 2006.

Downstream oil and gas authority BPH Migas will decide next month whether the project should be continued or not. But BPH Migas Committee member Jugi Prajogio said on Friday he personally think that it is likely to be discontinued for now due to the absence of gas source and lingering uncertainty on who will be the off takers of the gas to be distributed via the pipeline.

He explained that previous meeting with potential off takers such as state-owned electricity firm PT PLN and pipeline operators in Java including state-owned oil and gas firm PT Pertamina and gas distribution firm PT PGN Tbk suggested that for now they already have sufficient gas supply. As such they don?t have plans right now for extra gas supply. ?The chance (for the project to be continued) is getting slimmer. I personally think it would be quite tough,? he said, adding BPH Migas will meet with Bakrie on October 2 where the company will make presentation.

He said that if the current project by Bakrie is discontinued, BPH Migas will re-offer the project in the future if the gas sources and off-takers have been secured. (*)