PGN works to secure gas supply for Riau-North Sumatra pipeline project

State gas distribution firm PGN said on Tuesday it was still in talks with gas producers to get gas supply for its proposed Duri-Medan pipeline development plans and said that construction of the pipeline would not commence until it was able to secure firm gas supply source.

President WMP Simandjuntak said that PGN had signed preliminary deals with a number of companies including Amerada Hess, which operates Jambi Merang block in Jambi, ConocoPhillips which operates Corridor block in South Sumatra, Kondur Petroleum which operates Malacca Strait Block in Central Sumatra and with Serica Energy, which operates several block offshore North Sumatra. PGN director Nursubagyo said that thus far, PGN has not been able to clinch any gas sales agreement with the producers. ?We want to be sure first if they really have the gas,? he said.

PGN is planning to build the 509-km pipeline that will connect Duri in Riau to North Sumatra. The 28 inches pipeline would be able to transmit 350 MMCFD of gas. The pipeline will be the extension of Central Sumatra to West Java pipeline that PGN owns.

Nursubagyo said that the pipeline development will take 20 months to complete. We?re currently preparing for the construction, but won?t commence construction until at least one GSA is signed,? he said.

PGN has also signed a number of MoUs to sell gas from the pipeline segment.? PGN will not have any difficulty to sell 350MMCFD of gas as customers in Riau and North Sumatra are screaming for gas,? he said.

According to PGN presentation, the pipeline is expected to be operational in 2009.(alex/godang)