GAS UTILIZATION

closed

Given the abundance of gas reserves and its relatively low marginal cost to develop, the natural gas subsector offers wide opportunities for pursuing the energy development strategy. The primary objective is to accelerate the substitution of exportable petroleum product fuels with nonexportable natural gas. This would be achieved through : a) provision of an assured supply of natural gas to power plants, manufacturing industries and commercial entities in Surabaya, and 12 other towns in its vicinity in East Java and in Medan in North Sumatra; b) the integration of gas utilization plans and operations to facilitate balanced development; and c) institution building, technology transfer, and marketing studies to accelerate safe and efficient use of natural gas and to help plan its long-term development. The project consists of the following components : 1) design and construction of a natural gas supply system for Surabaya and its environs and expansion of the natural gas supply system for Medan; 2) technical assistance involving enhancement of PGN's skills in growth management, establishment of a Gas Technology Development Unit in LEMIGAS and upgrading of skills in MIGAS to facilitate institution of a regulatory system for safe use of natural gas; and 3) feasibility studies for natural gas marketing in Palembang, Jambi, Batam Island and Balikpapan.