PGN in talks with Malacca Strait PSC over gas supply

State gas distribution firm PGN said it was in talks with Malacca Strait PSC operator over the possibility to transport the latter? natural gas through PGN?s Sumatra pipeline grid.

?Talks are still preliminary, though? said PGN director Adil Abas in a recent interview with Petromindo.Com. Malacca Strait is located in Riau province, currently only producing oil.

Adil said PGN is also in talks with a number of Sumatra gas producers over the possibility to include their gas production into the company?s pipeline grid.

PGN is planning to supply natural gas to industrial island of Batam and also plans to supply gas to Pakanbaru in Riau province. Adil said Malacca Strait?s reserves are sufficient to supply some 100 MMCFD for some years.

PGN is already operating Grissik (South Sumatra) -Duri (Riau) and Grissik-Singapore pipeline grid. PGN is planning to build Duri-Medan (North Sumatra) grid, which is expected to be completed in 2008 and will start to build South Sumatra-West java grid next year, with completion expected around 2007.

Adil said when the pipeline grid is completed; gas consumption will sharply increase, as industries along the pipeline will turn for cheaper gas. ?This will give benefit to marginal gas producers as they would be able to utilize PGN?s pipeline grid,? said Adil. (alex)