Page 6 - AsianOil Week 17 2021

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Indonesian government divided

over delayed gas pipeline

The energy ministry and downstream regulator are split over how
the Cirebon-Semarang (Cisem) pipeline project should be executed,

with each side becoming increasingly invested in its vision

COMMENTARY INDONESIA’S energy ministry and down- While BPH Migas has acknowledged that the
stream regulator have locked horns over how lack of guaranteed gas supplies had comprised
best to proceed with the development of a the project’s development, it proceeded to award
WHAT: long-delayed natural gas pipeline. on March 15 the contract to Bakrie & Brothers
The Cisem project has The energy ministry wants the Cirebon-Sema- (BNBR) – the runner-up in the 2006 auction.
been delayed since its rang (Cisem) pipeline project, which will run from The decision was quickly criticised by Energy
award in 2006. West Java’s port of Cirebon to Central Java’s capi- Minister Arifin Tasrif, who argued in an April
tal city of Semarang and which has been delayed 1 letter to BPH Migas that BNBR’s appointment
WHY: for 15 years, to be funded by the state. BPH Migas, under the same terms and conditions set out in
The original developer meanwhile, has argued that its decision to keep the 2006 auction made little economic sense.
walked away in 2020, the project within the private sector is the correct The pipeline’s original design capacity of
arguing that the lack of choice and that the energy ministry does not have 350mn cubic feet (9.91mn cubic metres) per day
guaranteed gas supplies the authority to interfere with the process. has been called into question, given that local
made Cisem unviable. The two sides’ public spat, which has irked upstream projects are predicted to struggle to
a parliamentary energy commission, has even deliver such volumes.
WHAT NEXT: drawn in upstream regulator SKK Migas, which Tasrif called for the project to be developed
SKK Migas has said has said that while it can guarantee supplies, the via state funding instead. State-owned pipeline
gas supplies are not issue of guaranteeing demand for the project is a operator Perusahaan Gas Negara (PGN) said
the problem and that much bigger problem. last week that it was ready to step in to promote
demonstrating demand is Cisem’s development if need be.
the bigger issue. Pipeline problems “If the government is tasked with maintain-
The Cisem project was beset by delays after ing the Cisem section, PGN is ready to imple-
Rekayasa Industri (Rekind) was awarded the ment and integrate it with existing sections on
development contract in 2006. Rekind walked the island of Java to optimise gas utilisation for
away from the project in 2020, arguing that the all sectors,” PGN corporate secretary Rachmat
lack of guaranteed gas supplies coupled with Hutama told Kontan on April 23.
changing market dynamics had undermined While Hutama said his company was await-
the project’s economic viability. ing a government decision on the project’s

P6 www. NEWSBASE .com Week 17 29•April•2021