BP to sell gas blocks to Petronas and EMP
BP to sell gas blocks to Petronas and EMP
Fitri Wulandari, The Jakarta Post, Jakarta
British energy giant BP Plc expects to wrap up deals to sell
two gas blocks to local firm PT Energy Mega Persada (EMP) and
Malaysia's Petroliam National Bhd. (Petrona) later this month,
the company said on Thursday.
President of BP Indonesia Bill Schrader said the company would
sell its Kangean block in East Java to EMP, and the Muriah block
off the coast of Central Java to Petronas.
"We reached an agreement to sell them. We are in the process
of closing the deals with the target of closing by the end of the
month," Schrader said in Denpasar.
He declined to disclose the value of the transactions.
The company is selling the blocks because it wants to focus on
larger projects such as the Tangguh liquefied natural gas (LNG)
plant project in Papua.
"BP's strategy on exploration are to go after much bigger
opportunities like Tangguh. We really want to focus on getting
the Tangguh project launched and finding customers," Schrader
said.
BP inked an LNG deal worth US$2 billion with South Korean
steel maker Posco on Thursday. Under the sales and purchase
agreement, BP will supply 550,000 tons of the fuel for 20 years
to Posco from its Tangguh LNG plant starting in 2005.
The company is also seeking to finalize LNG contracts with
South Korean power company K Power, formerly known as SK Corp.,
and U.S. energy firm Sempra Energy.
The contract on the Kangean block ends in 2010 and BP had been
lobbying the government to extend the contract, but the
government has yet to give its final approval.
Schrader said EMP, as the new owner, was now responsible for
getting the contract extended.
"EMP will continue the process we have started of trying to
get an extension so that it can get to Terang Sirasun field and
develop more natural gas in East Java," he said.
A contract extension would allow EMP to explore and develop
the Terang Sirasun field, which is thought to have huge gas
deposits and could help ease the current natural gas shortages in
East Java.
BP has operated the Kangean block since 1980. Production
started in 1994 with the Pagerungan gas field. According to the
Oil and Gas Upstream Regulatory Body, Pagerungan supplies between
150 million and 175 million standard cubic feet of gas.
The company acquired Muriah from Shell in 1991 and carried out
initial explorations in 1997. The contract to operate Muriah
expires in 2021.