Ika Krismantari, The Jakarta Post, Singapore

Due to the slow progress being made on the rolling out of the regional gas-grid project, the leaders of the 10-member Association of Southeast Asian Nations (ASEAN) are scheduled to sign a plan of action in the next two months in Singapore to put the US$7-billion Trans ASEAN Gas Pipeline (TAGP) project back on track, Indonesia's energy minister says.

 Energy and Mineral Resources Minister Purnomo Yusgiantoro told The Jakarta Post late Thursday that the plan of action was aimed at establishing a concrete timetable so that the project could be completed by the end of 2010.

He said that the action plan envisaged the issuance of rules to resolve border issues between the ASEAN member countries whose borders would be traversed by the gas pipelines.

"Although gas sales will be based on business-to-business agreements, governments, as the regulators, will take part in laying the legal foundation that will provide clarity for the implementation of the project," Purnomo said.

However, he added, the government would not interfere in setting gas prices as these would be worked out on a business-to-business basis.

Each government would only set the gas transmission fees for the use of pipeline sections located within its national territory, with the range being dependent on the volume of gas being delivered and the economic value of the gas.

The announcement of the plan of action gives new hope to the project, which had been delayed due to uncertainties about supply.

The plan of action is expected to accelerate the implementation of the project, Purnomo says.

With increasing domestic demand, the project had been thrown into doubt due the fact that countries with abundant gas reserves, such as Indonesia, now prefer to supply the gas to their local markets rather than to export it to neighboring countries.

Indonesia, with proven and probable reserves of 182.5 trillion cubic feet, making it the largest gas producer in the ASEAN region, has adopted a policy of prioritizing the local market as gas demand for electricity generation and industry is expected to increase significantly in the future.

ASEAN Council of Petroleum (ASCOPE) secretary-in-charge Zainal B. Matassan said previously that he was still optimistic about the project as it would not rely solely on gas supplies from Indonesia.

He said that gas supplies could also be sourced from Malaysia and Thailand.

If completed, the TAGP project will link 10-nation grouping's key natural gas distribution centers with the pipeline network connecting natural gas sources in the Gulf of Thailand, Sumatra and Indonesia's Natuna islands in the South China Sea.

Seven potential interconnections have been identified as part of the project, involving a total pipeline length of 4,500 kilometers.

The links that are already operating are the Malaysia-Singapore gas pipeline, which delivers 150 million cubic feet from Malaysia to Singapore, the Indonesia-Singapore gas pipelines, which deliver gas from the Natuna and Sumatra gas fields to Singapore's SembCorp Gas Pte. Ltd., and Gas Supply Pte. Ltd., respectively.

Another gas pipeline connects West Natuna to Malaysian state oil and gas firm Petronas's offshore Duyong facility.