Kalimantan-Java gas pipeline to start operation in 2009

The government will speed up the construction of the East Kalimantan-Java gas pipeline project in an effort to support the ongoing fuel saving campaign, Kompas daily reported on Tuesday.

President director of the state owned gas distribution company PT PGN, WMP Simanjuntak, said in Jakarta on Monday that if the funding for the gas transmission network could be finalized by the end of this year, its construction could be completed within two years from now or in 2009.

"The construction of the gas transmission network which will supply gas from East Kalimantan to several cities in East and Central Java will cost about US$1.2 billion," he told reporters after attending a Cabinet meeting led by Vice President M. Jusuf Kalla on Monday.

The operation of the gas pipeline will be able to save the government's fuel subsidy up to Rp 60 trillion a year (based on the assumption of the crude oil price of US$70 per barrel). About Rp 35 trillion of the total funds could be saved from the reduction of oil usage for electricity plants and the remainders from the cut in the oil usage in other industries.

PGN is also constructing another interisland gas transmission line linking South Sumatra and West Java in a bid to cope with the increase in the gas demand from industries in the province. (*)