"Today we would send the proposal to SKSP Migas."Jakarta (ANTARA News) - The Downstream Oil and Gas Regulator (BPH Migas) hopes to carry out long standing plan to build a 1,000 kilometer long gas transmission pipe under the Java Sea to supply gas from East Kalimantan to Java.
Qoyum Tjandranegara, a member of the BPH Migas committee, said after a meeting here on Wednesday BPH Migas would propose the plan to the Provisional Working Unit of Upstream Oil and Gas (SKSP Migas) at the Energy and Mineral Resources Ministry, a new institution replacing the defunct Upstream Oil and Gas Regulator (BP Migas)
The transmission pipe was the second part of 1,200 pipes called Kalija from the Mahakam gas block in East Kalimantan to Tambak Lorong in Central Java.
The first part is 200 kilometers between Kepodang, off northern coast of Central Java and Tambak Lorong.
The plan is gas from the Mahakam Block will be transported through the pipe to Kepodang spanning a distance of 1,000 kilometer mostly under the sea and from there to Tambak Lorong, 200 kilometers away.
Construction of the first part is estimated to cost US$275 million and the second part around US$1 billion.
"Today we would send the proposal to SKSP Migas," Tjandranegera said.
He said the proposal includes closure of one of the five trains of the Bontang liquefied natural gas plant, to provide 275 million cubic feet of gas from the Mahakam Block, originally used to feed the train, for Kalija pipe.
He said the closure of one of its five production units would not kill the Bontang LNG business, adding the profit would be larger from supplying the gas to Java via the undersea pipe.
He said 275 MMSCFD would not be enough to meet the economic scale for the operation of the Kalija pipe.
"The pipe project would be feasible if it has at least 700 MMSCFD of gas for transport, but 275 MMSCFD would be enough to start with," he added.
He hoped more gas would be available in the future to be transported via the pipe.
He said LNG commitment to be met with one of the trains to be closed down could be met with LNG from the Tangguh LNG plant in Papua under a swap agreement.
He said if gas availability has been guaranteed in 2013, construction of the second part of the Kalija pipe could start in 2014 to be completed in 2016.
The defunct Upstream Oil and Gas Regulator (BPH Migas) has awarded the contract to build the Kalija pipe to Bakrie & Brothers, but the company plans to implement only the first part of the project as gas is not immediately.
The first part (Tambak Lorok-Kepodang) is to be operational in 2014.
(Uu.AS/H-ASG/B003)
Editor: Priyambodo RH
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