Saipem gets 70-year Riau land concession

Mustaqim Adamrah, The Jakarta Post, Singapore   

The Riau Islands provincial administration has finally granted Italian-based turnkey oil and gas contractor PT Saipem Indonesia a 70-year land concession for its massive proposed project on Karimun Island. 

The concession is part of the administration's efforts to encourage businesses to invest in the province's free trade zones (FTZs) in line with the 2007 law on FTZs, Governor Ismeth Abdullah said late Thursday during a signing ceremony at the Indonesian Embassy in Singapore. 

Also attending the ceremony were Saipem Indonesia offshore area manager Asia Pacific and managing director Michel Lain*, Indonesian Ambassador to Singapore Wardana, Karimun Regent Nurdin Basirun and the head of the Indonesian Investment Coordinating Board's Singapore representative office, Nurul Ichwan. 

"The company will use the 140-hectare land for a production facility, with a production capacity of 20,000 tons of oil and gas and related products," Lain* said. 

Pipelines, he said, would connect platforms and transport oil and gas from offshore to onshore. 

It is estimated that the first phase of construction of the facility will cost US$450 million and provide 5,000 jobs. 

Parent company Saipem International offshore general manager Yves Invona previously said the facility would become the production and logistics base for the Saipem Asia Pacific Group. 

He said the facility would start operations in 2010. 

Governor Ismeth has said the project confirms the revival of foreign direct investment in the province. 

Last year, Riau Islands attracted about $1 billion in investment, more than double the $484 million received in 2006. 

Karimun alone has attracted $700 million in investment this year, according to Ismeth. 

He said he aims to bring in $5 billion of investment during the next five years. 

Located 30 minutes from Singapore by ferry, Karimun is one of the province's three islands, which are designated as FTZs. 

The other islands are the Batam and Bintan Islands . 

Batam's main industries are electronics, manufacturing and shipbuilding. Bintan, with its garment and electronics manufacturing industries, measures 4,063 square kilometers, and Karimun, renowned for its deep-sea port, covers an area of 8,000 square kilometers.