BP Kangean contract to be revised in June
BP Kangean contract to be revised in June
Moch. N. Kurniawan, The Jakarta Post, Jakarta
State-owned oil and gas firm Pertamina said on Tuesday that it
expected to complete next month the revision of BP Kangean's
contract in the supply of gas to the province of East Java.
The contract, made in 1980, gives BP Kangean the exclusive
right to supply 600 million cubic feet per day (mmscfd) of gas to
the province until 2010.
BP Kangean is a unit of the British American oil and gas firm
BP.
Pertamina director for management production-sharing Effendi
Situmorang said the new contract would reduce the BP Kangean gas
supply volume, probably to about 200 mmscfd, which would allow
other players to enter the East Java market.
"Beyond that level (200 mmscfd), other oil and gas firms can
fulfill the gas demand in the province," he told reporters.
The early termination of the contract is necessary as gas
reserves from BP's Pagerungan island gas fields have been
depleted. Other gas suppliers could not enter the provincial
market despite the drop in supply, because of BP's exclusive
right to supply gas of up to 600 mmscfd. Other players could only
enter the market if gas demands exceeded that level.
According to data from Pertamina, BP Kangean's gas output
stood at 294 mmscfd in February and went down to 247 mmscfd last
month, while total gas demand in East Java has reached 380
mmscfd.
The decline in the gas supply has caused a gas shortage in the
province, forcing customers, mainly large industries such as
state-owned power firm PLN, to turn to a costlier industrial
diesel fuel as a substitute.
Pertamina has said it plans to import 225 kiloliters of
industrial diesel oil worth Rp 1.4 trillion (US$150.5 million)
this year to substitute gas in the province.
PLN has confirmed it would spend an extra Rp 400 billion to
buy fuel from Pertamina due to the depletion of BP Kangean gas
production.
Elsewhere, Effendi Situmorang said BP Kangean was committed to
improving its performance to meet its new gas supply contract.
Oil and gas firms Amerada Hess, Kodeco, Lapindo, Pertamina,
Mobil Madura are reportedly ready to supply gas to East Java.