BP ready to revise gas supply concession
BP ready to revise gas supply concession
Moch. N. Kurniawan, The Jakarta Post, Jakarta
BP Indonesia, a unit of British-American oil and gas firm BP
Plc., said it expected to reach an initial understanding with the
state-owned oil and gas firm Pertamina within the next few days
on the revision of BP's concession for the supply of gas in East
Java.
"Yes ... we'll talk with Pertamina on this issue. We hope to
gain a good understanding of alternative solutions," BP Indonesia
vice president for government and public affairs Satya W. Yudha
told The Jakarta Post on Thursday.
He said that BP was willing to revise the contract.
He was reluctant to provide further details.
BP, through a subsidiary called BP Kangean, holds a concession
to supply some 600 million cubic feet per day (mmscfd) of gas to
East Java until 2010 as agreed under a contract signed by
Pertamina in 1980.
Other oil and gas firms are only allowed to supply gas if the
demand in the province exceeds 600 mmscfd.
But as BP Kangean gas output continues to decline, the
government thinks it is unfair to maintain a contract that
prohibits others from bringing in the necessary supplies.
BP Kangean gas output stood at around 300 mmscfd in September
last year, and at 250 mmscfd in February this year.
It the contract is maintained, East Java would suffer a gas
shortage in 2004.
To avoid such an eventuality, the government is considering
canceling BP Kangean's concession.
Several gas firms have expressed their readiness to supply gas
to East Java. They include Pertamina, Kodeco, Mobil Cepu and
Madura, and Lapindo Brantas.
The state-owned electricity company PLN, one of the major gas
customers in East Java, said it has been suffering shortages
since early this year, forcing the company to use diesel fuel as
an alternative.
PLN's director for distribution and marketing Tunggono said
the switch to diesel fuel had raised the company's cost of
production by 10 percent to 15 percent.
"But we have no choice. Otherwise our power plant would be
unable to operate," he said.
PLN operates a gas-fired power plant in Gresik, East Java,
which according to a PLN official, consumes about 200 million
standard cubic feet per day (mmscfd) of gas.