Kepodang gas pipeline project still for Bakrie: Minister
Wednesday, May 9 2012 - 02:44 PM WIB
Ending confusion over who will develop the Kepodang-Tambak Lorok gas pipeline in Central Java, Minister of Energy and Mineral Resources Jero Wacik said on Wednesday that the government had awarded the project to PT Bakrie & Brothers, controlled by the rich and politically-powerful Bakrie family.
Jero claimed that a tender had been held for the contract to build the transmission pipeline of gas from the Kepodang field offshore Central Java to the Tambak Lorok in the province's capital of Semarang, owned by state owned electricity firm PT Perusahaan Listrik Negara (PLN). Muriah PSC is operated by Petronas Carigali, a subsidiary of Malaysian energy giant Petronas Bhd.
?The project was won Bakrie,? Jero said in a press conference after a meeting with Petronas? CEO Dato? Shamsul Azhar Abbas.
The statement appears to be contrary to the one made by Chairman of downstream regulator BPH Migas Andy Noorsaman Sommeng two weeks earlier. On April 23, Andy told Petromindo.com: ?There isn?t yet any decision as to who will build the pipeline. The pipeline project will most likely be put into auction.?
Jero did not provide details about the tendering process that led to the appointment of Bakrie as the developer of the project. He noted however Bakrie had sent a letter to the ministry, voicing commitment to developing the project.
"Bakrie has sent us a letter highlighting the roadmap for the development of the Kepodang pipeline. The pipeline will have been completed, once the Kepodang field starts production,? Jero said.
The appointment of Bakrie as the developer of the project has sparked controversies as Petronas initially planned to build it as an upstream project integrated with the development of the Kepodang field. The firm signed an MoU with PLN in late 2008 to start channeling the gas in the fourth quarter of 2011. Bakrie later argued that the project should be categorized a downstream project as part of the East Kalimantan-Central Java gas pipeline project whose contract was won by the firm in 2006. The firm thus claimed rights to build the project.
Bakrie was reportedly given approval to build the project in 2010 when the ministry was still led by Darwin Z. Saleh. After Darwin was replaced by Jero, Deputy Minister Widjajono Partowidagdo made a statement that the ministry was asking the opinion of the Attorney General?s Office about the legality of the change in the status of the project in the downstream project.
The ministry has never publicly released the opinion of AGO, while Widjajono recently passed away while climbing Mount Tambora.
Bakrie confirmed on Wednesday that it had sent a letter to the ministry.
?It?s true that PT Bakrie & Brothers has sent a letter to the Ministry of Energy and Mineral Resources, stating its capability and readiness to accelerate the development of the Kepodang gas pipe as long as 207 kilometers in accordance with the Plan of Development issued by BPMIGAS to Petronas, so that it will be completed by the fourth quarter of 2014,
?Bakrie is still committed,? the firm told Petromindo.
One of the main concerns voiced by PLN in the past after learning that the project had been transferred to Bakrie is that the cost payable by PLN for the Kepodang gas would like to increase as a result. Under the Mou with Petronas, Tambak Lorok will receive a total of 354 bcf or 116 mmscfd of gas from Kepodang starting from the fourth quarter of 2011 until the end of Petronas' contract on the Muriah block in 2021. The price was set at $5 per mmbtu, with the power plant being the delivery point.
Since the delivery of the gas has been postponed to the fourth quarter of 2014, the total amount of gas from Kepodang throughout the shortened contract period will fall to 290 bcf, then PLN's Primary Energy Director Nur Pamudji argued.
Director General of Oil and Gas Evita Legowo said on Wednesday that the problem has been solved. The ministry would extend the contract held by Petronas on Muriah PSC for another three years so that PLN will receive a similar amount of gas as stated in the initial agreement.
Meanwhile, BPMIGAS? Chairman R Priyono said PLN would pay Petronas $4.61 per mmbtu ?with a 4-6 percent escalation? for the gas from Kepodang, plus a certain amount of toll fee to Bakrie. He did not specify the toll fee.
When contacted by Petromindo, PLN?s Construction Director Nasri Sebayang said the toll fee had not been fixed yet.
Editing by Johannes Simbolon