RI gas growth hinges on adequate pipelines

Transmission pipelines to link Indonesia's scattered natural gas reserves to potential markets are key to the development of the country's vast natural gas resources, a senior official with PT Perusahaan Gas Negara said.

But, standing in the way are two major problem areas - "inadequate standards and insufficient legislation." There is also "no incentive to develop gas supplies in all areas of the economy," A. Qoyum Tjandranegara, president-director of the state-owned company, said.

Indonesia needs "a satisfactory and proper gas regulatory network" to encourage increased investment in the sector and unite "all public and private sector forces in one big effort to develop the gas industry," he noted.

Already, Indonesia's energy policy "gives priority to energy efficiency together with a reduction of energy consumption and cut in environmental pollution," said Tjandranegara.

In line with the policy, the government is promoting the use of natural gas in a number of sectors such as power generation, fertilizers, steel and iron, he added.

But the policy objectives can only become reality if the country puts in place an adequate natural gas transmission and distribution network, at the center of which is the "proposed Indonesian Gas Transmission System (IGT)," Tjandranegara noted.

The IGT will link East Kalimantan, Java, Sumatra, Batam, Singapore, Johor and Natuna reserves with the market.

"Indonesia has many sources of natural gas which (are) more than sufficient to meet the domestic needs," the PGN president said.

The country's proven and probable reserves exceed 130 trillion standard cubic feet, but production from the reserves current stands at only around 8.5 billion cubic feet per day, he added.

Natural gas demand grew to 6.8 billion cf/d in 1999 from 3.8 billion cf/d in 1989, he said.

Nearly 60% of this production is processed into liquefied natural gas, which is predominantly exported. Indonesia is the world's largest LNG producer accounting for nearly 30% of global output of about 97 million metric tons a year.

One major factor constraining the share of domestic consumption, which in turn is limiting the natural gas production out of the ground, is the large distances between Indonesia's potential gas markets and the locations of its reserves, Tjandranegara said.

For example, Java, which is the 'central market area', contains only 5% of the country's proven and probable reserves, he noted. (*)