BPH Migas to Hold Review on Cirebon-Semarang Transmission Project

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 302.Pers/04/SJI/2020

Date: 14 October 2020

BPH Migas to Hold Review on Cirebon-Semarang Transmission Project

Downstream Oil and Gas Regulating Agency (BPH Migas) together with Ministry of Energy and Mineral Resources (EMR) and relevant state agencies will form a joint team to hold review after PT Rekayasa Industri (Rekind) pulled out of the Cirebon-Semarang (Cisem) gas transmission project. BPH Migas has accepted Rekind's withdrawal from this national strategic project (PSN) and called the withdrawal as a bold step. Rekind has returned to BPH Migas the letter of determination of PT Rekayasa Industri as the winner of the Special Right for Cirebon-Semarang Gas Transmission Project.

"BPH Migas has received a letter from Rekind, number 357/10000-LT/X/2020 dated 2 October 2020 on the return of the determination of PT Rekayasa Industri as the winner of the Special Right for Cirebon-Semarang Natural Gas Transmission Project and BPH Migas has received the return of the Special Right," said Head of BPH Migas, Fansurullah Asa, in a press conference on Wednesday (14/10).

With the receipt, BPH Migas has revoked Rekind's right as the Cisem auction winner.

Fansurullah went on to say that according to the meeting results of BPH Migas Committee on 12 October 2020, because the Cirebon-Semarang natural gas pipeline is a National Strategic Project, BPH Migas will conduct an internal study and coordination with Ministry of EMR and other parties to make the best steps and solutions within a month, starting 13 October 2020.

"We've reached an agreement that BPH Migas will assign Director of Natural Gas of BPH Migas to carry out the study within a maximum period of 1 month from 12 October 2020. The study will be coordinated by Ministry of EMR, Ministry of Finance, and other relevant parties involved in the strategic project to construct the Cisem natural gas transmission section," said Fansurullah.

Within the one month period, it is expected that a joint decision will be made as to the best solution to the Cisem transmission section issue.

The joint team will consider a number of feasible options to carry out the Cirebon-Semarang project. Option number one is to give the right to the first and second runners-up.

Option number two is BPH Migas will re-auction the project. The re-auction will be conducted by a joint auction committee made up of Ministry of EMR, in this case Directorate General of Oil and Gas and Inspectorate General, Ministry of Finance, and other state agencies. The last option is BPH Migas will issue a government assignments to a certain business entity because this transmission section is a national strategic project.

"The one-month study will contain comprehensive research on the supply and demand sides, for example about gas supply, real demands; then we'll also examine techno-economy, toll fee, and so on," added Fansurullah.

The Cirebon-Semarang natural gas transmission project is an open access pipelines auctioned by BPH Migas in 2006. PT Rekayasa Industri won the auction based on Decision of Head of BPH Migas number 035/Kpts/PL/BPH Migas/Kom/III/2006 of 21 March 2006.

The pipeline construction which is included in the National Strategic Program (PSN) is expected to support the increase in natural gas domestic use. It is also in line with the government's plans to stop gas export to Singapore and reduce gas price for industry to US$ 6 per mmbtu as set out in Presidential Regulation Number 40 of 2016 on Natural Gas Pricing. (IY)

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