Pertamina ties up with Indonesian railway operator

Indonesia’s state-owned oil company PT Pertamina has signed a memorandum of understanding with another state-owned enterprise, railway operator PT Kereta Api Indonesia (KAI) to help build a gas and fuel pipeline across land owned by KAI.

The memorandum will help advance several of Pertamina’s pipeline projects, including a 90-kilometer liquefied natural gas (LNG) pipeline between Gresik and Semarang, and a fuel pipeline from Cilacap to Yogyakarta and Cilacap to Bandung.

Pertamina President Director Dwi Soetjipto said that the agreement would help alleviate land-related problems that have obstructed the development of energy infrastructure in Indonesia, the Jakarta Post reported.

“Pertamina needs to distribute energy through constructing pipelines, but the land permission has always been a problem for us. Thankfully with this agreement with KAI, the land-acquisition problems will decrease and the distribution and transportation of natural gas and fuel will be improved,” Dwi said at the signing ceremony on Aug. 28.

The agreement also will include the distribution of Pertamina’s fuel using KAI’s trains, particularly from the East Java port city of Tuban to Surabaya.

KAI President Director Edi Sukmoro said that the agreement will help reduce Pertamina’s transportation costs and distribution time, in line with Indonesian President Joko Widodo’s push to improve the efficiency of state-owned enterprises.

“This teamwork between the two state-owned enterprises will reduce the dependency on land transport, which will also increase the growth of both companies,” said Sukmoro.