State engineering firm PT Rekayasa Industri (Rekind) is hopeful it will find offtakers for gas transmitted through the Cirebon-Semarang pipeline before the end of August so that it can begin construction next year for a gas transmission project that has been delayed for 11 years.
In 2006, Rekind won the tender to develop the Cirebon- Semarang facility expected to transmit 350 million standard cubic feet per day (mmscfd) of gas through a pipeline spanning 255 kilometers across East Java and West Java provinces.
As of today Rekind has yet to kick off the construction process as there has been no guarantee of a gas supply or offtakers, resulting in the Downstream Oil and Gas Regulatory Agency (BPH Migas) setting Sept. 15 as the deadline for the company to decide if it wants to continue with the project.
To help Rekind realize its commitment, the Energy and Mineral Resources Ministry will set up a meeting between the company and prospective gas offtakers from West Java on Aug. 21 and ones from Central Java four days later.
“Many industry players from West Java and Central Java need the gas. So we will approach them so that we can get letters of intent from or even sign memorandums of understanding with them to ensure there will be gas offtakers for this project,” Rekind strategy development and risk management director Yanuar Budi Norman said recently
Yanuar said that his side would need to find committed offtakers for at least 200 mmscfd of gas to make the Cirebon-Semarang pipeline project, which will cost around US$ 400 million, economically feasible. Then, Rekind will report results of the meetings to the ministry on Aug. 28 and to BPH Migas on Sept. 15.
If everything goes as expected, Rekind will reassess the feasibility of the project within six months. After that, it will jointly construct the pipeline in March or April next year along with PT Pertamina Gas (Pertagas), a subsidiary of state-owned energy company Pertamina. The construction process is expected to be completed within 33 months.
Rekind expects it will hold a majority stake of at least 60 percent in the project, while the remaining 40 percent will be controlled by Pertagas.
About 90 percent of the Cirebon-Semarang pipeline will be constructed on the right-of-way (ROW) owned by state-owned railway company PT Kereta Api Indonesia (KAI).
“We will rent the ROW from PT KAI and acquire some plots of land for the remaining 10 percent of the pipeline,” Yanuar said.
However, one thing that is still in limbo is the source of gas to be transmitted through the Cirebon- Semarang pipeline. Yanuar said the ministry would help to find the gas supply and was still reviewing several options, including the use of liquefied natural gas (LNG) sourced from the Bontang refinery in East Kalimantan. That way the LNG would be regasified first before being transmitted through the pipeline, he added.
Energy and Mineral Resources Minister Ignasius Jonan previously said it was possible for Rekind to use LNG, but that the most important thing was to ensure the affordability of the gas.
Jakarta Post, Page-18, Monday, August 21, 2017
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