PGN says Chinese oil firms interested in ambitious pipeline project

State oil and gas distribution firm PGN said that four major Chinese oil companies had shown keen interest to take part in the construction of 1,700 kilometers pipeline that would connect gas rich province of East Kalimantan to the industrial provinces of Java.

"During a visit to China last week, China National Offshore Oil Corporation (CNOOC), PetroChina, China National Petroleum Corp. (CNPC) and China petroleum and Chemical Corporation (Sinopec) had shown interest to participate in the project," said President Director WMP Simanjuntak Thursday.

He, however, admitted that no firm deal had been sealed during the visit. ?It was just preliminary talk," he said.

PGN would appoint a consultant to carry on economic feasibility study of the project next month with financial help from United States Trade and Development Agency (USTDA). The feasibility study is expected to be completed in six months.

Apart from Chinese companies, Simanjuntak said several other companies such as Gaz de France, Italy's Saipem, TransCanada Pipeline and Petroworld from South Africa had indicated their interest to participate in the project.

The project will be divided into to segments, the 1,100-km 32 inches pipeline from East Kalimantan to East Java, and the 680-km 28 inches pipeline from East Java to West Java. The pipeline would be able to transport 1 billion cubic feet of gas per day from East Kalimantan to Java.

Simanjuntak said if proven feasible, the project will commence in 2005 and would start to deliver gas in 2008.

The project cost is estimated at US$ 1.7 billion. Asian Development Bank and European Investment Bank had indicated to pledge around $ 320 in loan if the project is proven feasible. PGN is projected to be able to raise between $ 300 million to 400 million in equity. The remaining $ 1 billion will be financed by investors. (godang)