Pertamina submits Gresik-Semarang pipeline construction performance bond

State-owned oil and gas company Pertamina has handed over US$300.000 worth of performance bond to downstream oil and gas regulator BPH Migas as collateral for the planned construction of gas transmission pipeline spanning from Gresik in East Java to Semarang in Central Java, Bisnis Indonesia reported Wednesday.

Downstream oil and gas regulator BPH Migas?s head Tubagus Haryono disclosed the handing over of Pertamina?s performance bond in Jakarta on Tuesday.

?Today Pertamina hands over performance bond worth US$300,000 to BPH Migas,? he said.

The handing over of the collateral has reinforced Pertamina?s special right for the Gresik-Semarang gas transmission pipeline construction project following a tough negotiation with state-owned railway firm PT Kereta Api Indonesia (PT KAI) which nearly led to the re-auction of the project.

Earlier, Pertamina had sent a letter to BPH Migas, asking for the recalculation of the amount of investment required for the Gresik-Semarang transmission pipeline project because its negotiation with PT KAI failed to reach an agreement.

BPH Migas was about to make a decision to drop Pertamina?s status as the first winner of the tender following the company?s move to ask for a change in the investment value, with the project almost falling to the hands of PT Rekayasa Industri as the second winner of the tender.

As part of the plan, Pertamina's subsidiary PT Pertamina EP would develop and operate Gresik-Semarang 250-km pipeline project on the land along the railway track of state-owned railway operator PT KAI. 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. (*)