Kodeco agrees to relocate E. Java pipeline by 2012

South Korean oil and gas firm Kodeco Energy Co. has pledged to relocate its gas pipeline from the shippping lane of Surabaya by 2012, Bisnis Indonesia said on Monday.

The pledge was stated in a memorandum of understanding (MoU) signed by the firm together with the provincial administration and the central government, East Java's governor Soekarwo said.

Many parties have called for the relocation of the gas pipeline on the grounds that vessels to and from Surabaya may hit it given its position in the shipping lane.

Under the MoU, Kodeco is still allowed to lower the position of the pipeline until the end of 2010 to minimize the possibility of being hit by vessels.

Meanwhile, the relocation of Kodeco?s gas pipes may inflict financial losses of at least Rp 2 trillion (1US$ = Rp 9,000) to the state because the government would not only cover the cost of the relocation of the pipeline but also to suffer losses resulting from the cut in the gas supply during the relocation process, according to Iwan Ratman, the head of the management division of upstream oil, gas regulator BPMIGAS said as quoted by Investor Daily on Saturday that the relocation and the construction of new pipes would cost up to US$55 million.

Iwan, however, said that an independent survey should be conducted to assess if it is really needed to relocate the pipeline or it is safe only by deepening the pipeline position as required by the East Java government. (*)