The 470km pipeline starts in Grissik, southern Sumatra and is part of a $US9 billion deal signed in February 2001. The pipeline will also represents a third source of natural gas for Singapore, joining Indonesia's Natuna Island and Malaysia.

The pipeline is expected to be operational early next month and will start pumping 50mmcfd million cubic feet a day into Singapore's power grid. By 2009, it is expected to hit as much as 350mmcfd, more than doubling Indonesia's current supply of 325mmcfd to Singapore.

The link also represents a much needed new source of revenue for cash-strapped Indonesia with funds from the project going towards a $US1.8 billion plan for pipelines connecting the western and eastern parts of the country, according to a report in The Straits Times.

With this project's completion, Indonesia also moves closer towards realising the Trans Asean Gas Pipeline program, conceived in 1996 to integrate gas supply lines throughout Asean.

The Straits Times report said the head of Indonesia's state-owned gas company PT PGN, W.M.P. Simandjuntak, called the Grissik pipeline 'a breakthrough that would allow the company to penetrate the international gas market.

"Additionally, this project's completion should increase the confidence of investors and lenders in our ability to deliver cheap gas to the region and beyond."

The $US420 million cost of the pipeline was financed partially by the Asian Development Bank, the European Investment Bank and PGN.