Indonesia may cancel huge gas pipe project

The Indonesian government is very likely to drop the plan to build a gas pipe spanning 1,200 km from Kalimantan island to Java, Vice President Jusuf Kalla said Wednesday.

The gas pipe project from the huge gas source Bontang in East Kalimantan to the Central Javanese capital of Semarang is estimated to cost 1.2 billion U.S. dollars, intended to meet the growing gas consumption in the country's most crowded island of Java that reached 1.1 million cubic feet per day in 2005.

"The gas piping project from Bontang to Java may be no longer necessary...We have found a major gas source in Cepu (Central Java) that can meet demand in Java," Kalla was quoted by the national Antara news agency as saying.

Speaking to local officials during a visit to Bontang, Kalla reiterated the government's commitment to prioritizing gas supplies for domestic industries and consumers.

Indonesia, the world's largest gas exporter, has mostly sold liquefied natural gas to foreign buyers but recently adopted a policy to allow bigger share of domestic consumption to deal with the energy crisis.

"We choose to develop domestic industries by cutting (gas) export," he said.

Source: Xinhua