BP gas contract must be reviewed, says minister

BP gas contract must be reviewed, says minister

The Jakarta Post, Jakarta

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said
on Tuesday that the government planned to review gas supply
contracts with BP Indonesia for the Pagerungan gas field in
Madura Island, reported Antara.

"There will be a review...because the contract seems
monopolistic and gives privileges to the operator," he said,
referring to BP Indonesia, which belongs to Anglo-American energy
giant BP Plc.

Purnomo claimed that when the contract was made, the structure
of the gas market was still monopolistic and gave gas producers a
stronger bargaining position against consumers.

At the time, he claimed, the government was forced into
signing the contract because East Java province badly needed the
gas from the Pagerungan gas field to run its booming industry.

Under the contract, BP Indonesia is required to supply about
600,000 million cubic meters of gas per day. The contract also
stipulated that other gas operators were not allowed to invest in
the province unless its gas demands exceeded 600,000 million
cubic feet of gas daily.

Purnomo said that BP Indonesia could only supply about 180,000
million cubic feet of gas per day, which caused East Java to fall
short by over Rp 400,000 million cubic feet of gas.

Purnomo said that gas market today was no longer monopolistic,
but competitive, which enabled consumers to take control.

In the meantime, BP Indonesia could not be reached for
comment.

Recent gas leaks have forced BP to shut down five gas fields
in the Pagerungan contract area, which has also reduced gas
supplies to only 100,000 million cubic feet per day.

State-owned oil and gas company Pertamina president Baihaki
Hakim has blamed BP for the incident, saying that it was caused
partly by BP's negligence in maintaining the gas pipeline.