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March 24, 2009

Indonesia's Bakrie to build offshore gas pipeline

Indonesia's PT Bakrie & Brothers will build a pipeline to deliver gas from an offshore field to a power plant operated by the state electricity firm in Central Java, the energy minister was quoted by Reuters as saying Monday.

The diversified group, with interests in telecoms, plantations, property and energy, won the right from the government in 2006 to pipe gas from East Kalimantan to Java, a distance of about 1,200 km (750 miles).

Energy Minister Purnomo Yusgiantoro said this section of the pipeline would be about 200 km and run from Java island to the Muriah gas block in the Java Sea.

"This is one section of the gas pipeline from East Kalimantan to Java," Yusgiantoro told reporters.

Malaysia's Petronas operates the Muriah gas block and has a contract to supply 145 billion British Thermal Units (BTU) of natural gas a day for state own electricity firm PT Perusahaan Listrik Negara (PLN) for 10 years.

The politically connected Bakrie group, controlled by the family of Indonesia's chief social welfare minister Aburizal Bakrie, is due to hold a tender to select the contractor to build the pipeline.

The pipeline section is due to be completed in 2011.

Siddharta Moersjid, a company spokesman, confirmed that it would build the pipeline from Muriah to the Tambak Lorok power plant in Central Java, but did not elaborate or give financial details.

Yusgiantoro said the gas pipeline from East Kalimantan was needed to secure gas supply to heavily populated Java in future.

"It will not disturb the production of LNG (liquefied natural gas) in Bontang plant," the minister added.

The Bontang plant in East Kalimantan aims to produce 307 LNG cargoes of 125,000 cubic metres each in 2009, down from 317 cargoes in 2008.

Indonesia has been seeking to divert more gas and coal to power stations in order to meet growing power demand and prevent future blackouts in its creaking power grid.

Industry officials forecast Indonesia's power demand will grow around 10 percent a year.

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