Jakarta (ANTARA) - Indonesia's state gas utility PT Perusahaan Gas Negara (PGN) will begin construction on a 367-kilometer (km) crude oil pipeline in the Rokan Block, Riau, in July.

The project, located in the corridors of Minas-Duri-Dumai and Balam-Bangko Dumai, will connect the Rokan oil block to Pertamina's Dumai refinery in the province.

PGN's Director of Infrastructure and Technology Redy Ferryanto stated here on Friday that the project aimed to boost synergy between subsidiaries of the PT Pertamina Group.

The project is projected to boost oil production and lifting from the Rokan Block, the backbone of national oil production, which constitutes one-third of the country's output.

"With budget allocation of some US$300 million, PGN has cut capital expenditure, with efficiency of some 30 percent. The project is estimated to become one of PGN's major projects in its target of capital expenditure for 2020. The Financial Investment Decision (FID) of the Rokan pipelines project is expected to optimize efforts to enhance efficiency," he noted.

Ferryanto affirmed that 250 thousand barrels of oil per day will be transported from Rokan to Pertamina’s refinery in Dumai.

The construction project is targeted for completion by the end of 2021.

The pipeline comprise 12 segments and three stations: Duri, Dumai, and Manifold Batang.

Pertagas, part of Indonesia's Gas Holding, will handle the construction project as well as its operations and maintenance.

The project is envisioned to have a positive impact to augment the company's revenue from crude oil transportation business, particularly for its contractors of the cooperation contract (KKKS), such as PT Chevron Pasific Indonesia (CPI), BOB Bumi Siak Posako, and other KKKS.

"Construction of the pipelines is a national strategic project to support national energy resilience. Oil production in the Rokan Block is expected to increase national oil lifting as a primary energy to boost the national economy," Ferryanto added. Related news: PGN to supply LNG for 3,000 logistics trucks
Related news: PGN committed to turning CNG into environmentally-friendly energy

Translator: Afut Syafril N, Sri Haryati
Editor: Rahmad Nasution
Copyright © ANTARA 2020