US provides grant to finance PGN?s gas pipeline feasibility study

As part of its commitment to help Indonesia?s economic development, the United States, through its Trade and Development Agency (TDA), has agreed to provide a grant worth US$655,000 to state owned gas distribution company PT PGN to help the latter finance the feasibility study on the development of gas pipeline linking Kalimantan and East Java, Suara Karya reported on Tuesday.

The grant was officially handed over by the U.S. Ambassador to Indonesia, Ralph L. Boyce and PGN?s President Director, WMP Simanjuntak in a ceremony in Jakarta on Monday.

The study that will be financed by TDA will include evaluation on the supply of natural gas in Kalimantan and possible demand in Java and the possible development of the 1,100-kilometer pipeline linking the two islands. The planned pipeline is expected to have the capacity to supply gas of 1 billion cubic feet per day (bcfpd).

Speaking to the press after receiving the grant, Simanjuntak said that the development of the gas pipeline had been long planned to help cope with the shortage of gas supply in East Java. According to him a number of international financial agencies such as the Asian Development Bank and European Investment Bank have expressed their keen interest to support the project

He said that the feasibility study, which would be started this September or October, was scheduled for completion on in March 2003. The construction of the pipeline will begin in the middle of 2005 and is expected to be completed in 2008.

Simanjuntak said that the gas to be transmitted through the pipeline would be taken from gas fields operated by Unocal and TotalFinaElf in Kalimantan. He estimated that the pipeline would be able to meet about 60 percent of the gas demand in East Java which would reach about 1,676 million cubic feet per day (mmcfpd). (*)