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Given the responsibility for the operation and maintenance of the East Kalimantan gas and oil pipeline network, which is owned by P.T. Badak NGL Co., Pertamina DAK (Daerah Kalimantzn), VICO Indonesia and Total Indonesie, the Pipeline Department of VICO Indonesia has the exclusive right and is obligated to conduct such operations in a professional, effective and efficient workmanlike manner. The ultimate objectives of these operations are 100% reliability and to ensure line integrity of the pipeline network.A Strategic Management Concept has been adopted by the Pipeline Department of VICO Indonesia for its Pipeline Management System in an effort to deal with the critical importance of the operation and maintenance of the East Kalimantan pipeline network. This management concept will optimize the use of available resources of manpower and equipment.The subject management system defines clearly the role and responsibility of VICO Indonesia and Pipeline Asset Holders' representatives. The Pipeline Management System is in line with the agreement between them which is known as the Pipeline Operation and Maintenance Agreement.The Pipeline Management System, on the basis of a Strategic Management Philosophy, is arranged and designed in a continuous and closed management loop which includes four essential and sequential basic elements as follows :(1) strategy formulation,(2) strategy implementation(3) execution, and(4) evaluation and control.The cost and budgeting system related to the Pipeline Management System is unique. The Pipeline Department is operating under a budget system financed by the above parties, and costs are classified into four categories i.e. : (1) Direct Cost, (2) Common Cost, (3) Shared Cost and (4) Overhead Cost.The feedback mechanism of the Pipeline Management System ensures adequate management control over the entire operation, and enables the management to monitor the work program and budget.