Pertamina halts Java gas storage project

The Jakarta Post | April 20, 2012 | Rangga D. Fadillah

Indonesia’s plan to improve gas infrastructure took a stumble on Thursday when state oil and gas company PT Pertamina announced that it had halted the construction of a floating storage and re-gasification unit (FSRU) in Central Java.

The decision came after the State-Owned Enterprises (SOE) Ministry issued a letter telling state gas distributor PT Perusahaan Gas Negara to relocate its planned FSRU in Belawan, North Sumatra, to Lampung, according to Gunung Sardjono Hadi, president director of PT Pertamina Gas (Pertagas), a subsidiary of Pertamina.

The ministry said the relocation was necessary as Pertamina planned to convert the Arun LNG plant in Aceh into a receiving terminal to supply gas to industries and power plants in Aceh and North Sumatra. If the Belawan FSRU is not relocated, the two provinces will experience over supply of gas, the ministry said.

“In May, all related stakeholders in FSRU projects will gather and discuss what we’ll do with the planned Central Java FSRU, whether it will still be needed if the Belawan FSRU is moved to Lampung,” Gunung told reporters after leading a discussion session at the Indo Coal Bed Methane (CBM) 2012 in Jakarta on Thursday.

Gunung said the Lampung FSRU would be connected to the South Sumatra-West Java pipeline network, which meant that the gas could be channeled to Java. From West Java, the gas can be transported to Central Java and East Java through Pertagas’s planned 140-kilometer-long pipeline from the Muara Tawar power plant in Bekasi to Cirebon in West Java, the 255-kilometer-long pipeline from Cirebon to Semarang in Central Java and the 271-kilometer-long pipeline from Semarang to Gresik in East Java.

“West Java is experiencing a gas shortage. In Central Java, the demand is also growing, therefore all stakeholders have to sit together to discuss the gas balance in Java. We have to estimate the availability of gas supply in the next five years,” Gunung said.

However, he said, whether the Central Java FSRU unity was constructed or not, the company’s three pipeline projects would still go ahead.

“The Cirebon-Semarang and Semarang-Gresik pipelines are actually built on the assumption that they will receive gas supply from the Central Java FSRU, but even if the FSRU isn’t built, we can find other sources, like the Cepu block [on the border of Central Java and East Java],” Gunung said.

It is estimated that the Muara Tawar-Cirebon pipeline will require a total investment of US$300 million, while the Cirebon-Semarang pipeline will cost $400 million and the Semarang-Gresik pipeline $360 million.

The Cirebon-Semarang pipeline will be built by PT Rekayasa Industri (Rekind), but since there is a problem with the project financing, Pertagas aims to cooperate with Rekind to jointly build the pipeline.

“We’re now discussing that with Rekind. We may establish a joint venture for that purpose. The share composition may be 50-50 or 60-40. There is also a possibility for Pertagas to become the majority shareholder if Rekind, which won the contract, wishes so,” Gunung said.

He said he hoped that in the future, the government could improve its role in infrastructure development so as to accelerate the project fruition.

http://www.thejakartapost.com/news/2012/04/20/pertamina-halts-java-gas-storage-project.html