URGENT: Bakrie?s contract on Kepodang pipeline project ?revoked?
Monday, April 23 2012 - 10:13 AM WIB
The government has nullified its previous decision to award the Bakrie group the contract to develop a gas pipeline linking the Kepodang field to the Tambak Lorok power plant in Semarang, Central Java.
?There isn?t yet any decision as to who will build the pipeline. The pipeline project will most likely be put into auction,? Andy Noorsaman Sommeng, Chairman of oil and gas downstream regulator BPH Migas, told Petromindo.Com.
Issuance of licenses for gas pipeline development is part of the authority of BPH Migas.
Earlier reports say the government has decided to award the contract to develop the gas pipeline to the Bakrie group after hearing the latter?s argument that the pipeline should be considered as part of the East Kalimantan-Central Java pipeline project which had been awarded to the company. The contract to build the so-called Kalija pipeline was awarded to the company in 2006 but the firm has yet to start building it due to uncertainty over gas supplies from East Kalimantan.
Initially, the Kepodang-Tambak Lorok gas pipeline was considered an upstream project, thus it should be built by the contractor of the Kepodang field. The field which is part of the Muriah PSC located around 200 km off the northern coast of Central Java is operated by Malaysian firm Petronas Carigali Bhd, a subsidiary of Petronas Bhd.
According to reports, the government later decided to change the status of the pipeline project into a downstream project ? a move that paved the way for the Bakrie group to take over the project. It remains unclear if the decision was made by oil and gas upstream authority BPMIGAS or the Ministry of Energy and Mineral Resources. The ministry was led by Darwin Z. Saleh when the Bakrie proposal to build the pipeline was reportedly approved at the end of 2010. He was replaced as minister by Jero Wacik in October 2011.
The change of the pipeline project?s status clearly upset state owned electricity firm PT Perusahaan Listrik Negara (PLN) which owns the Tambak Lorok power plant. The firm said as a result of the change of the status of the pipeline project, the supply of gas from Kepodang should be delayed to the fourth quarter of 2014 from the initial schedule of fourth quarter of 2011, that was agreed upon by PLN and Petronas back in 2008. The price of Kepodang gas payable by PLN would also increase.
Tambak Lorok, which has a combined capacity of around 1,200 MW, has been forced to use expensive diesel oil or marine fuel oil to generate power due to the absence of gas supply. PLN recently suspended its operation as its operating cost had become too burdensome amid the rise in oil price.
The ministry, under Jero, is apparently doubting the legality of the decision to change the status of the gas pipeline project and to award the contract to Bakrie. In January this year, then Vice Minister of Energy Mineral Resources Widjajono Partowidagdo, who recently passed away, said the ministry had filed a request for the opinion of the Attorney General Office about the legality of the decision.
?We have asked ?fatwa? (legal opinion) from the Attorney General Office whether the Kepodang case breaches the law or not,? Widjajono said.
It remains unclear whether the AGO has issued its legal opinion. But, Andy said the government had officially decided the Kepodang-Tambak Lorok pipeline will be built as a downstream project.
?It?s already final. The pipeline will be built as a downstream project and will become an open access one. Thus, contractors of other blocks will be allowed to use the pipeline to channel their gas in the future, provided that they pay a toll fee. This pipeline project has nothing to do with the Kalija project that will be built by Bakrie,? Andy said.
Editing by Johannes Simbolon