Kalimantan-Java pipeline project to be auctioned next week

The 1,100-km gas pipeline project linking East Kalimantan and Central Java will be auctioned next week despite the lingering dispute over the viability of the project, Investor Daily reported on Thursday.

The head of the Upstream Oil and Gas Regulatory Agency (BP Migas) Tubagus Haryono confirmed on Wednesday about the auction plan, saying that the agency was finalizing the preparation for the auction.

He, however, said that he did not know yet the names of companies which would take part in the auction.

Meanwhile the president of state owned gas distribution company PGN, WMP Simanjuntak confirmed that PGN would be one of the bidders of the project billed as the country's longest undersea pipeline network.

"We are ready to take part in the tender. Hopefully, we will come out as the winner," he said, adding that if PGN wins, it would form a partnership with other companies to build the inter-island pipeline.

PGN had asked BPH Migas not to auction the project because the company had the capability to handle the project with its own resources. BPH Migas, turned down the request, insisting that under the existing regulations, the 1,100 Km pipeline project should be auctioned.

There was also a dispute among the government's agencies about the viability of the project. Some said that the project would be too costly given the lack of the gas resources in East Kalimantan. According to them, providing gas supply in the form of liquefied natural gas (LNG) will be better for Java because besides less costly, the LNG supply can be obtained from multi sources.

The giant pipeline project which will be built with total cost of about US$1.3 billion would have a capacity to transmit 1,000 million standard cubic feet per day to Central Java. (*)