Hanan Nugroho

INDOGAS 2005, the 2

nd
International Conference & Exhibition, Jakarta 17-20 January 2005
Financing natral ga! infra!trctre "do#n!trea$% &ro'ect!
in Indone!ia
(
)anan Ngroho

Ab!tract*+ Law No. 22 Year 2001 concerning Oil and Gas states explicitly the
priority for using more natural gas in domestic maret. Once the master plan for
national gas transmission and distri!ution issued !y the go"ernment# there will !e a
great demand to de"elop natural gas infrastructure pro$ects# including pipeline
transmission and distri!ution as well as LNG recei"ing terminal and gas storage
facilities in %ndonesia. &ue to the characteristic of large in"estment costs# long
construction period and lac experience in !uilding such ind of huge gas pro$ects#
howe"er# there will !e critical challenges in pro$ect de"elopment and how to finance the
pro$ects.
'his paper presents our experiences# as a go"ernment agency# in financing
natural gas pro$ect# especially that of pipeline transmission and distri!ution. 'he paper
descri!es issues of go"ernment de"elopment !udget# !ilateral(multilateral loans in gas
de"elopment pro$ects# lesson we learn from the experiences# and financing option for the
future.
*
Presented for INDOGAS 2005, the 2
nd
International Conference & Exhibition, 17-20 January
2005, Jakarta Convention Center, Indonesia.

Sr. Energy Panner!E"ono#ist, $%&PPE'&S(, Jakarta 10)10, I'*+'ESI&. E-#ai,

nugro-o-n./a00enas.go.id
,
Hanan Nugroho
INDOGAS 2005, the 2
nd
International Conference & Exhibition, Jakarta 17-20 January 2005
, Introdction
Indonesia is one a#ong t-e #ost advan"ed "ountries in deveo0ing i1uefied natura
gas $2'3( for e40orts. 5-e e40orts of gas -ave for a 1uite ong ti#e #ade signifi"ant
"ontri/utions to t-e "ountry6s e40ort earnings and its govern#ent revenues as 7e.
8o7ever, t-e deveo0#ent of natura gas industry in Indonesia6s do#esti" #arkets is sti
in t-e eary stage. 9-ie do#esti" de#and for natura gas is "onsidera/e and t-e
0otentia of natura gas to redu"e t-e -eavy de0enden"y on oi in Indonesia6s energy #i4
is 1uite great, t-ere is /ig "onstraint due #osty to t-e avaia/iity of natura gas
infrastru"tures. 'atura gas de#and is "entered around t-e 0o0uous-energy greedy of
Java, 7-ie #ost of gas fieds are s"attered far fro# t-e de#and "enters.
2a7 'o. 22 :ear 2001 Con"erning +i and 3as states e40i"ity t-e 0riority for using
t-e "ountry6s natura gas for do#esti" usages. 5-e 2a7 -as /roug-t a ne7 s0irit to t-e
natura gas /usiness in Indonesia, e40e"ting t-at t-e do#esti" /usiness 7i /e gro7ing
"onsidera/y in t-e near future. 5-e 2a7 esta/is-es t-e %P8 ;I3&S $a ne7
<eguatory %ody to dea 7it- oi and natura gas do7nstrea# industry(, un-/unding t-e
stru"ture of oi and gas industry $#ainy in t-e do7nstrea#(, i/erai=es t-e# and o0ens
t-e# for #ore 0ayers. 5-e issuan"e of ne7 +i > 3as 2a7 -as aso driven gro7ing
"on"erns on #any as0e"ts and 0ros0e"ts of natura gas industry in Indonesia, in"uding
natura gas infrastru"ture 0ro?e"ts deveo0#ent and t-eir finan"ing s"-e#es.
Currenty, t-e govern#ent is 0re0aring a #aster 0an for nationa natura gas
trans#ission and distri/ution net7orks. It is anti"i0ated t-at, as t-e egiti#ate #aster
0an is 0u/is-ed /y t-e govern#ent, and guideines for 0u/i"!0rivate "o#0anies
0arti"i0ation in natura gas 0ro?e"t deveo0#ent is 0re0ared /y t-e %P8 ;I3&S, t-e
natura gas infrastru"ture deveo0#ent 0ro?e"ts 7i /e gro7ing signifi"anty in
Indonesia. In t-e near future, $i( do 7e -ave ade1uate sour"es to finan"e t-e gro7ing
natura gas infrastru"ture 0ro?e"ts, $ii( 7-at s"-e#es of finan"ing for 0u/i" and 0rivate
se"tor 0arti"i0ation in natura gas infrastru"ture deveo0#ent 7oud /e
avaia/e!deveo0ed $iii( -o7 #ig-t t-e govern#ent!%P8 ;I3&S 0rovides in"entives to
in"rease t-e attra"tiveness of natura gas infrastru"tures deveo0#ent in do#esti" #arket@
5-ese ty0e of 1uestions are /eing asked /y /usiness 0eo0e, 0oi"y #akers and reguators
dea 7it- natura gas /usiness in Indonesia.
5-is 0a0er addresses 0ro?e"t finan"ing issues for natura gas infrastru"ture 0ro?e"ts in
Indonesia, /y des"ri/ing our e40erien"es in finan"ing natura trans#ission and
distri/ution 0ro?e"ts, anay=ing to gain esson fro# t-e e40erien"es, and 0ro0osing a ne7
s"-e#e for natura gas infrastru"ture finan"ing for t-e future.
2 O-er-ie# of Indone!ia.! natral ga! ind!tr/ !trctre and
infra!trctre
2+, General ind!tr/ !trctre
Indonesian o7ns natura gas reserves of a/out A2.5 triion "u/i" feet, ranks t-e 10
t-
of t-e 7ord argest gas reserves $200)(. 5-e reserves are s"attered around t-e
ar"-i0eago, 7it- "onsidera/e of t-e# "an /e found in East Bai#antan, 'ort- Su#atra
$&"e-(, 9est Pa0ua, and C-ina Sea areas. 5-e a#ount Indonesian natura gas reserves is
2
Hanan Nugroho
INDOGAS 2005, the 2
nd
International Conference & Exhibition, Jakarta 17-20 January 2005
1uite arger t-an t-ose of oi. Indonesian natura gas 0rodu"tion is reativey fat, fro#
C,D7E ;;SCF* in 1AA7 to C,E27 ;;SCF* in 200).
3as e40oration and 0rodu"tion are "arried out /y PE<5&;I'& $t-e state oi and
gas "o#0any( and a/out )0 Produ"tion S-aring Contra"tors. 5-ose a"tivities are
generay #anaged /y %P ;I3&S - 5-e E4e"uting %ody for G0strea# +i and 3as
%usiness. E44on;o/i, Cono"oP-ii0s, Gno"a, 5otaFinaEf are a#ong t-e PSC
"o#0anies 7orking for natura gas e40oration and 0rodu"tion in Indonesia. 5-eir
0rodu"tion a"tivities are o"ated in Sout- Su#atra!Ja#/i, &"e- $&run(, East Bai#antan
$%adak, %ontang(, Sua7esi $Sengkang, *onggi( and Pa0ua $5anggu-(. 5otaFinaEf is
"urrenty t-e argest gas 0rodu"er in Indonesia 7it- its 0rodu"tion a"tivities o"ated in
East Bai#antan. E44on;o/i 7as a do#inant 0rodu"er, /ut its 0rodu"tion is de"reasing
naturay, for instan"e t-at in &"e-.
In t-e eary stage of Indonesia6s natura gas deveo0#ent $1A70s(, t-e gas 7as
dire"ted for e40ort, as 2'3. Indeed, Indonesia is sti t-e argest 2'3 e40orting "ountry,
s-i00ing t-e 2'3 using 2'3 tankers to Ja0an, Sout- Borea and 5ai7an, 7-ie t-e
3overn#ent is 0anning to s-i0 t-e sa#e natura gas "o##odity to C-ina and GS& in
near future. In addition to s-i00ing 2'3, t-e "ountry aso e40orts natura gas t-roug-
0i0eine to its neig-/ors Singa0ore and ;aaysia.
&s Indonesia6s e"ono#y and de#and for energy gro7, -o7ever, t-e do#esti"
"onsu#0tion for natura gas is in"reasing fast. 5-e argest gas "onsu#er in do#esti"
#arket "urrenty is fertii=er and 0etro"-e#i"as $AH, 200)(. Ee"tri"ity generation is
gro7ing to /e t-e argest "onsu#er of natura gas in Indonesia. Su/stitution of natura
gas to oi in do#esti" #arket is a"tuay very su/stantia in redu"ing Indonesia6s -eavy
de0enden"y on oi in its do#esti" energy #i4.
In do#esti" #arket, t-e 0ayers for Indonesian gas industry "o#0rise t-ree #a?or
grou0s, $a( gas 0rodu"ers, 7-i"- are #ainy t-e PSC "o#0anies, $/( gas "onsu#ers,
industry, fertii=er ! 0etro"-e#i"a, ee"tri"ity generations, et"., and $"( gas trans0orters.
5rans0ortation to "onsu#er areas, for a arge 0art, is sti /eing "arried out /y t-e gas
0rodu"ers. P5 P3' $t-e state-o7n gas "o#0any( is "urrenty t-e #a?or gas trans0orter
$trans#ission( and aso serves as t-e do#inant o"a distri/ution "o#0any $2*C( for
natura gas in Indonesia.
5-e natura gas industry in Indonesia is sti do#inated /y PE<5&;I'&, 7-o
o0erates an verti"ay integrated /usiness in t-e oi and gas industry. PE<5&;I'&
o0erates 2'3 and 2P3 0ants in %ontang and &run and severa ot-er 2P3 0ants in
Indonesia $in t-e sa#e o"ation 7it- oi refining(. 5-e 2'3 and 2P3 trans0ortation and
storages in do#esti" is aso o7ned!#anaged /y PE<5&;I'&. For 1uite a ong ti#e,
PE<5&;I'& aso o0erates natura gas tran#isison 0i0eines.
'evert-eess, t-e P5 P3' $t-e State 3as Co#0any( P5 P3'( -as deveo0ed a
eading roe in natura gas trans#ission and distri/ution a"tivities, o7ns t-e ongest
trans#ission and distri/ution 0i0eines in Indonesia.
5a/e 1 0resents t-e stru"ture, infrastru"ture and 0ayers in Indonesia6s natura gas
industry.
0
Hanan Nugroho
INDOGAS 2005, the 2
nd
International Conference & Exhibition, Jakarta 17-20 January 2005
1able ,+ Indone!ia.! natral ga! & 23G ind!tr/4
!trctre, infra!trctre and &la/er
Ind!tr/
Strctre
3la/er"!% 3rodct5ca&acit/5nit
Share
6
Note
)pstream
*roduction
PSC Co#0anies,
Perta#ina
C,000 I A,000 ;;SCF* PSC Co#0anies
do#inate 0rodu"tion
a"tivities
&ownstream
production
Ga! 3roce!!ing
2'3
2P3
Perta#ina
Perta#ina
)0,1 #iion ton!year
105 #iion ton!year
100
100
3lan,
- 2'3 5anggu- $%P(
and 2'3 ;atindok
$Perta#ina(.
- 2P3 in Cia"a0
'ransmission
+ &istri!ution
3i&eline
Perta#ina
P3'
%P
P5 Igas
EC0 k#
C00 k# $trans#ission( J 25E7 k#
$distri/ution(
Pi0e Pagerungan-Jati#
@
3lan,
3as trans#ission,
Su#atra I Java, 5rans
Java, East
Bai#antan I Java.
,torage
2P3
Perta#ina D 2P3 de0os

100
'rade
Perta#ina
P3'
Other players-
2P3 &gent
2P3 5u/e Pant
SP%3 $C'3(
SP%3 $2P3(
SP%E
C #arketing units $GP;S(
C /ran"-, 1 aid /ran"-, 1
trans#ission "o#0any
E2) unit
5
2C
1C
EE
&gents, fiing
stations, tu/e 0ants
are #osty o7ned /y
0rivate "o#0anies,
"oo0eratives and
yayasan $foundation(.
Sorce, compiled from &it$en .igas# *GN + *ertamina# 200/.
2+2 Ga! 3i&eline Net#or7
&s a genera rue, natura gas trans0ortation re1uires -ig-er te"-ni"a standard and
t-us -ig-er "osts t-an t-at of "rude oi, oi 0rodu"ts and "oa. 5-is fa"t due t-e natura
"-ara"teristi" of gas, 7-i"- in t-e gas 0-ase is very diffi"ut to trans0ort. 3as needs to /e
"o#0ressed to "ryogeni" te#0erature to in"rease its density, /efore trans0orting t-e# in
2'3 for#. 3as #ust /e "o#0ressed /efore trans0orting t-e# using C'3 s-i0!ve-i"e.
3as "an aso /e trans0orted using 0i0eines and sent to storage /efore deivering t-e# to
t-e end users. 5-e e4isten"e of 0i0eine net7orks is very essentia for trans0orting natura
gas fro# its sour"es to "onsu#er "enters.
Pi0eine net7orks for natura gas trans#ission in Indonesia -ave /een deveo0ed on
0ro?e"t 0er 0ro?e"t /asis and are not integrated yet. 5-e tota engt- of t-e e4isting
trans#ission 0i0eine is a/out 1,2C0 k#. It is 1uite s#a "o#0ared to t-at of GB $1C,E00
8
Hanan Nugroho
INDOGAS 2005, the 2
nd
International Conference & Exhibition, Jakarta 17-20 January 2005
k#(, t-e GS& $a/out E50,000 k#( or #any ot-er industria "ountries. 5-e net7orks "an
/e grou0ed into gathering lines $serve t-e fo7 of gas fro# gas fieds!/o"k stations to
gas 0ro"essing 0ants ! /ooster "o#0ressions( and sales lines $fro# gas 0ro"essing 0ants
to gas "onsu#ers(.
5-e gat-ering ines -as /een deveo0ed in ine 7it- t-e finding of gas fieds, s0read
out in &"e-, Sout- Su#atra, East Bai#antan, 'atuna and Java-%ai isands. 5-e
dia#eter for t-ese gat-ering ines ranges /et7een 1DK and E2K, 7it- t-e a00ro4i#ate
engt- for ea"- 0i0eine seg#ents a/out 10-10A k# and t-eir "a0a"ities /et7een 200 to
2000 ;;SCF*. 5-e gat-ering ines 7ere deveo0ed in Java and &"e- areas sin"e t-e
eary 1
5-e deveo0ed saes ines are, Java Sea-5an?ung Priok!;uara Barang, Cia#aya-
Ciegon, Pagerungan-3resik, Pra/u#ui--Pae#/ang, 3rissik-*uri, 'atuna-Singa0ore,
3rissik-Sakernan, and Sakernan-%ata#-Singa0ore. 5-e P3' is "urrenty deveo0ing
trans#ission 0i0eines fro# Sout- Su#atra to 9est Java, and "ondu"ting a feasi/iity
study on a trans#ission 0i0eine "onne"ting East Bai#antan, Centra Java and 9est
Java. 5-e deveo0#ent of gas trans#ission 0i0eines in Indonesia -as /een "arried out
#ainy /y PE<5&;I'&, PSC Co#0anies $for gat-ering ines(, and eit-er PE<5&;I'&
or P3' for saes ines. 5a/e 2 s-o7s t-e nationa natura gas trans#ission 0i0eines
net7orks.
0 Financing natral ga! de-elo&$ent &ro'ect!
9-ie u0strea# 0ro?e"ts are finan"ed /y PSC "o#0anies, 7e in %&PPE'&S dea
/asi"ay 7it- do7nstrea# natura gas infrastru"ture 0ro?e"ts. +ur e40erien"es in
finan"ing natura gas 0ro?e"ts "an /e "ategori=ed as foo7,
$i( /udget evauation!ao"ation for 0oi"y studies, feasi/iity study, resear"-, #onitoring
and evauation of gas 0ro?e"ts. 5-e a"tivities are usuay "arried out /y ;inistry of
Energy $*3 +i > 3as and 2E;I3&S in 0arti"uar(
$ii( 0rovide o"a /udget for foreign sour"es funding in natura gas reated 0ro?e"ts $for
"a0a"ity /uiding, feasi/iity, ?oint resear"-, and natura gas trans#ission and distri/ution
0ro?e"ts(. 5-e #ain e4e"uting agen"ies for t-ese a"tivities are P5 P3' and 2E;I3&S.
$iii( a"tive in seeking for $foreign( finan"ing agen"ies to finan"e natura gas infrastru"ture
0ro?e"ts, es0e"iay trans#ission and distri/ution. 5-e agen"y 7e serve so far is P5 P3'.
3overn#ent of Indonesia6s /udget ao"ated to natura gas 0ro?e"ts sin"e t-e first
<EPE2I5& $1A70s(, as s-o7n in its yeary *IP do"u#ents is 1uite s#a "o#0ared to
t-at of, for instan"e, rura ee"trifi"ation 0ro?e"ts.
1
9e #ay t-ink t-at t-is due to o7
0riority given to gas 0ro?e"ts deveo0#ent in do#esti" #arket during t-e 1A70s-1AA0s
0eriod.
1able 2+ Indone!ia Natral Ga! 3i&eline
1
*IP $&aftar %sian *roye(, a govern#ent of Indonesia6s do"u#ent t-at s-o7s ist of
0ro?e"t a"tivities and t-eir /udget, as a resut of evauation /y e4e"uting agen"ies,
;inistry of Finan"e and %&PPE'&S. %&PPE'&S re"enty does not invove in
/udgeting detai ite#s of 0ro?e"ts.
5
Hanan Nugroho
INDOGAS 2005, the 2
nd
International Conference & Exhibition, Jakarta 17-20 January 2005
No
+
3i&e Na$e
Dia$eter
"inch%
2ength
"7$%
Ca&acit/
"99SCFD%
2ocation :e$ar7
Gathering 2ine
1. +ffs-ore-2. Seu#a7e )0 10A 1,000 &"e- 2'3 Pant
2.
+ns-ore-
2. Seu#a7e!&run 1D - E2 )0 - )E 200 - 2,000 &"e-
2'3 Pant!
Industry
). %adak-%ontang E2 57 2,000 Bai#antan 2'3 Pant
E. Fied-%adak-%ontang 20 - )D 10 - 70 )00 - 1,500 Bai#antan 3as 0ro"essing
5. +ffs-ore-9. Java 1D - 2D 20 - 70 200 - D00 9est Java Pro". Patfor#
D. 3rissik Fieds 1D - 2D 1) - 50 200 - D00 S. Su#atra 5o Saes 2ine

Sale! 2ine
7.
+ffs-ore - 5. Priok!
;uara Barang 1D - 2D 10 - 55 200 - D00 '. Java Po7er Pant
C. Cia#aya-Ciegon 2E 220 500 9. Java Industries
A. Pagerungan-3resik 2E - 2C ) - )70 500 - 700 E. Java
Po7er Pant!
Industry
10. Pra/u#ui--Pae#/ang 20 - 2C 15 - 50 )00 - 500 S. Su#atra
Po7er Pant!
Industry
11. 3rissik-*uri 2C 550 700 Su#atra
*uri Stea#
Food
12. 'atuna-Singa0ore 1D I 2C 10 - E70 200 - 700

S.C-ina Sea
E40ort!Po7er
Pant
1). 3rissik-Sakernan 2C 1)5 700 C. Su#atra 5rans#ission
1E.
Sakernan-%ata#-
Singa0ore 2C ))5 700
<iau
Su#atra
E40ort!Po7er
Pant
Sour"e, &G Oil + Gas
In t-e eary 1AA0s t-ere 7as a 0ro?e"t to deveo0 P3' "a0a"ity in #anaging natura
gas /usiness, funded argey /y t-e 9ord %ank oans. 5-is 0ro?e"t 7as done in t-e sa#e
ine 7it- natura gas distri/ution 0ro?e"ts, o"ated in severa "ities $%andung, ;edan,
Sura/aya, %ogor, et"(. 5-en, using our L0ure <u0ia-K
2
7e ao"ate so#e /udgets for
natura gas distri/ution 0ro?e"ts, to e40and t-e distri/ution net7orks. %ut t-e a#ount
7as not signifi"ant enoug-. So far, P5 P3' distri/ution net7ork is ony a/out 2,500 k#,
s"attered in severa "ities, serves ony a fe7 -ouse-od "ostu#ers.
+ur reation 7it- P5 P3' in t-ese finan"ing "ases is as a #ediator to seek for o7
"ost finan"ing sour"es, using 3overn#ent fa"iity. 9e usuay dea 7it-
#utiatera!/iatera finan"ing agen"ies su"- as 5-e 9ord %ank, &sian *eveo0#ent
%ank, Euro0ean Invest#ent %ank, and Ja0an %ank for Internationa Coo0eration $J%IC(.
5-ese agen"ies 0rovide reativey o7 "osts of #oney to 3overn#ent /a"ked-u0 0ro?e"ts.
P5 P3' itsef -as to "o#0ensate for t-is 3overn#ent servi"e t-roug- t-e S2&
$su!sidiary loan agreement( s"-e#e.
2
Pure <u0ia-, /udget t-at "o#es fro# t-e 3overn#ent of Indonesia revenues, 7it-out
any foreign sour"es $oan!grant(.
;
Hanan Nugroho
INDOGAS 2005, the 2
nd
International Conference & Exhibition, Jakarta 17-20 January 2005
5-e first natura gas 0ro?e"t 7e "onsider as L/igK is t-e 3rissik-*uri trans#ission
0ro?e"t, t-at fo7 natura gas fro# fieds in 3rissik area to an en-an"e oi re"overy $stea#
food( 0ro?e"t in *uri, Su#atera. 5-e 0ro?e"t 7as t-e first trans#ission one o7ned /y
P5 P3'. 5-e "ost of t-e 0ro?e"t 7as GSM )10 #iion. 5-e enders for t-e 0ro?e"t 7ere
&*% and EI%. &fter invoving in 3rissik-*uri 0ro?e"ts, 7e #ove on ot-er 0ro?e"ts
finan"ing su"- as 3rissik-%ata# and %ata#-Singa0ore.
5a/e ) 0rovides a su##ary of natura gas trans#ission and distri/ution 0ro?e"ts and
finan"ia ter#s 7e invove.
9e earn t-at, fro# our e40erien"es, a strong 0ro0osa 7i /e very i#0ortant in
su""eeding a 0ro?e"t. 'atura gas 0ro?e"t 0ro0osas -ave to /e "o#0eted 7it- ot-er
0ro0osas "o#e fro# ot-er se"tors. 2ending agen"ies -ave t-eir 0riorities in 0ro?e"ts
finan"ing, so t-at a #erey good 0ro0osa so#eti#e aso not enoug-. 5-erefore, a
"o#/ination of good 0ro0osa $t-at s-o7 strong e"ono#i" feasi/iity of t-e 0ro?e"t and
Lgood o00ortunityK to su/#it t-e 0ro0osa( 7i /e i#0ortant in su""eeding our natura
gas 0ro?e"ts. +ur e40erien"e in /uiding "a0a"ity for natura gas infrastru"ture 0ro?e"ts,
in"uding to deveo0 a sound natura gas 0ro?e"ts 0ro0osa -as /een gro7ing 1uite 7e
sin"e 7e started to fo"us on do7nstrea# 0ro?e"ts deveo0#ent a/out 15 years ago.
9e are 7orking to "onvin"e ending agen"ies t-at it is /etter to finan"e La /undeK of
natura gas 0ro?e"ts 0ro0osas t-an ony a s0e"ifi" seg#ent ike 7e did so far. 5-is
a00roa"- 7i give fe4i/iity for 0arties, es0e"iay sin"e 7e e40e"t t-at t-e nu#/er of
natura gas do7nstrea# 0ro?e"ts 7i /e gro7ing in vou#e in t-e near future.
8 Financing natral ga! &ro'ect! to co$e
It is anti"i0ated t-at, as t-e #aster 0an and reguation for do7nstrea# natura gas
deveo0#ent issued /y t-e 3overn#ent, de#and for natura gas infrastru"ture 0ro?e"ts
7i /e gro7ing su/stantiay. 5-en t-ere is 1uestion 7-o 7i deveo0 su"- trans#ission,
distri/ution, or re"eiving ter#ina 0ro?e"t@ 8o7 to finan"e t-e 0ro?e"ts and do 7e -ave
ade1uate finan"ing sour"es do#esti"ay@ 5-e P3' itsef 7i no onger a do#inant
0ayer. Even, as t-e "o#0any "-anged its status as a 0u/i" "o#0any, t-e P3' 7i no
onger eigi/e for fa"iities as 3overn#ent /a"ked-u0 0ro?e"t.
+ur study in %&PPE'&S esti#ates t-at to 2010 t-ere 7i /e a de#and of a/out E to
E.5 /iion GSM for natura gas do7nstrea# 0ro?e"ts, #ainy for trans#ission ines. *ue
to t-e "-ara"teristi" of arge invest#ent "osts, ong "onstru"tion 0eriod and a"k
e40erien"e in /uiding su"- kind of -uge gas 0ro?e"ts, -o7ever, t-ere 7i /e "riti"a
"-aenges in 0ro?e"t deveo0#ent and -o7 to finan"e t-e 0ro?e"ts.
1able 0+ Natral ga! "do#n!trea$% &ro'ect! finance
<
Hanan Nugroho
INDOGAS 2005, the 2
nd
International Conference & Exhibition, Jakarta 17-20 January 2005
No
. Name of Project Year
L
(km)
D
(inch) $MM Funding Owner Loan Condition
1
W. Java Transmission
System 1978 200+ 28 120 Pertamina Pertamina

2
Gas Distribution (Jakarta
!o"or 198# $% &!'D PG(
i ) 12 * "ra+e ,erio-. /
years
0e-an1 2oan ,erio-. 1/ years

$ Gas Distribution (Surabaya1 1990 8# &!'D PG(
i ) 1$ * "ra+e ,erio-. /
years
2oan ,erio-. 1/ years

% Grissik3Duri Pi,e2ine 199/ /%% 28 $10 4D! 5&! PG(
& ) 1/ * "ra+e ,erio-. %
years
2oan ,erio-. 20 years

/ Grissik3Sin"a,ore Pi,e2ine 2001 %78 28 %1/ 4D! 5&! PG(
& ) 1/ * "ra+e ,erio-. %
years
2oan ,erio-. 20 years

# S.Sumatra3W.Java Pi,e2ine 200% /20 28 $2 %%0
J!&6
PG( PG( & ) 0.9/ * an- 0.7/ *7
"ra+e ,erio-. 10 years
2oan ,erio-. %0 years

7
W. Java Trans 8 Distr
59,ansion 200/ 120 PG(

8
5. :a2imantan 3 West Java
Pi,e2ine
Sorce, 0appenas# 200/.
+ur study aso s-o7s t-at t-ere are a"tuay do#esti" resour"es of funding, "o#e
fro# govern#ent /udget, state "o#0any /udget, /anks and non-/ank sour"es. 5-ese
funds "an /e "o#0e#ented 7it- /iatera!#utiatera sour"es of funding. 5-e
govern#ent /udget to /e ao"ated to natura gas infrastru"ture 0ro?e"ts is 0resenty very
i#ited, sin"e t-e govern#ent -as to s0end its /udget to #any ot-er various 0ro?e"ts. 5-e
nationa /anking fund ao"ated to infrastru"ture 0ro?e"ts is aso i#ited, /ut t-ere is an
indi"ator t-at t-ose fund 7i /e gro7ing. 5-e 0otentia non-/ank sour"es are do#esti"
0ension fund, insuran"es, and #utua fund. ;aturity #is#at"- is sti a 0ro/e# 7e -ave
to sove in order for su"- sour"es of finan"e to /e used for natura gas infrastru"tures
0ro?e"ts.
&not-er finan"ing o0tion for is /y "reating an infrastru"ture 0ro?e"ts fund. 5-e
govern#ent is no7 7orking on t-e "reation!0re0aration for su"- kind of infrastru"ture
fund, at-oug- t-e first 0riority is not to /e given to natura gas trans#ission!distri/ution
0ro?e"ts, /ut to ot-er infrastru"ture 0ro?e"ts su"- as to road and -ousing. &t-oug- t-e
to0 0riority is not for natura gas deveo0#ent 0ro?e"ts, 7e are "onvin"ing t-at natura
gas infrastru"ture 0ro?e"ts s-oud /e in a first /at"- of 0ro?e"ts to /e finan"ed /y su"-
infrastru"ture fund. 5-e reason is not ony t-at "o#0any and traditiona foreign sour"es
are i#ited, /ut aso /e"ause t-e deveo0#ent of natura gas infrastru"ture 7i /e very
=
Hanan Nugroho
INDOGAS 2005, the 2
nd
International Conference & Exhibition, Jakarta 17-20 January 2005
/enefi"ia to su00ort Indonesia6s energy diversifi"ation 0oi"y. So far, t-e "ountry
energy #i4 is very -eavy de0endent on oi, 7-i"- is /a"ked u0 /y very e40ensive
govern#ent su/sidy.
5-e 0ro0osa for giving -ig- 0riority for natura gas infrastru"ture 0ro?e"ts
$do7nstrea#( is #entioned in t-e 3overn#ent Infra!trctre S$$it -ed
"on"urrenty 7it- t-is I'*+3&S 2005 Conferen"e.
:eference!4
'ugro-o, 8anan. 200E. %ncreasing the share of natural gas in national industry and
energy consumption- infrastructure de"elopment plan1 Jakarta, 3erencanaan
3e$bangnan IN!)!200E, -. 20-)).
'ugro-o, 8anan. 200E. *engem!angan industri hilir gas !umi %ndonesia- tantangan
dan gagasan. Jakarta, 3erencanaan 3e$bangnan IN!E!200E, -. )2-52.
'ugro-o, 8anan, et a. 200E. Gas energy pricing in %ndonesia for promoting the
sustaina!le economic growth. 3roceeding, 5-e 1At- 9ord Energy Congress >
E4-i/ition, Sydney, 5-A Se0te#/er 200E.
'ugro-o, 8anan. 200E. *ercepat infrastrutur untu mendongra pemaaian gas !umi.
Boran 5e#0o, )0 'ove#/er 200E.

>