PGN says Pertamina welcomed in S. Sumatra-W. Java pipeline project

State gas distribution firm PGN said it would welcome state oil and gas company Pertamina to put its equity investment in gas pipeline project that would connect gas rich province South Sumatra to the industrial provinces of West Java.

?Why not? This is a big project. PGN would be glad to share this project as long as it brings benefit to both parties. We will also be thrilled if state electricity firm PLN as big costumer also join the project,? PGN president WMP Simanjuntak told reporters Tuesday. But Simanjuntak said PGN would insist that it hold majority stake in the project.

Pertamina?s upstream director Iin Arifin Takhyan told Petromindo.Com on Tuesday that Pertamina was interested to acquire some stakes in the project, but admitted that it had not started formal talks with PGN regarding the matter.

PGN, with soft loan from Japan?s JBIC, is planning to construct 500-km pipeline from Pagardewa in South Sumatra to Cimanggis is Jakarta, with first gas expected to flow in 2005-2006 with initial capacity of 250 million standard cubic feet per day (MMCFD), ramping up to 600-700 MMCFD at peak capacity. Construction is expected to commence late next year.

Gas will initially be sourced from Pertamina?s fields in South Sumatra and afterward other South Sumatra producers are expected to transport their gas through the pipeline.

Simanjuntak said gas sales agreement is expected to be signed by the end of this year, while loan agreement from JBIC will be signed around March next year.(alex/godang)