The pipeline will be used to deliver 150 million cubic feet per day (MMcfd) to Singapore after Indonesia signed a $9 billion contract with Gas Supply Private Ltd, wholly-owned by state-utility Singapore Power, in 2001 to supply gas for 20 years.
The new pipeline is expected to boost Singapore's industrial and domestic gas usage and also increase the role of combined cycle gas technology to account for over 50% of electricity output in the city.
The gas is to come from three gas fields in Sumatra, two of which are operated by ConocoPhillips, the other by PetroChina.
Currently Indonesia pipes 325 MMcfd of natural gas to Singapore's Sembawang Gas under a 22-year deal which started in 2001.
PGN also plans to issue $200 million in Euro bonds in August to finance future pipeline projects.
The company says it needs to build around 240 km of gas pipeline from South Sumatra province to West Java and 380 km of pipeline from central Sumatra to North Sumatra province. Both would be sections of a larger pipeline network being built.
PGN said it would pipe about 600 MMcfd from South Sumatra to West Java in 2006 to supply power stations.
