Pertamina may pull out from Gresik-Semarang pipeline project

PT Pertamina EP, a subsidiary of state owned oil and gas company Pertamina, may pull out from the Gresik-Semarang gas pipeline project after state owned railway company PT Kereta Api Indonesia (KAI) backed off its initial commitment to use part of its land along the railway track between the two cities for the gas pipeline, Koran Tempo reported Monday.

Pertamina EP's vice president for gas utility Dedi Saroji sent a letter to oil and gas downstream industry regulatory body BPH Migas recently saying that KAI had backed out its commitment to cooperate in the development of the gas pipeline.

KAI had initially agreed to use part of its land along the Gresik-Semarang railway track for the planned gas pipeline.

A source at BPH Migas Pertamina said that Pertamina had no choices but to pull out from the project and surrender the rights to the second bidder, or return the rights to BPH Migas which should then re-tender the project.

On March 2006 BPH Migas awards Pertamina for special right to develop and operate Gresik-Semarang 250-km pipeline section. The pipeline is part of national pipeline grid that was planned to connect the islands of Sumatra, Java and Kalimantan. The pipeline will be designed to flow 350-500MMCFD of gas. (*)