BP to sell interest in Kangean block

The Jakarta Post, Jakarta

Energy firm BP Indonesia, a subsidiary of British-American BP Plc., plans to sell some of its interest in Kangean oil and gas block in East Java.

"BP is planning to reduce its interest in Kangean. Discussion with Indonesian and international companies are ongoing ," Budi Susanto, BP's government and public affairs manager for Java told The Jakarta Post in an e-mail.

Budi did not explain the price BP would sell its interest in Kangean and the purpose of the divestment.

However, Budi said the company would ensure the supply of natural gas to its customers in East Java would not be disrupted by the divestment measure. The company would maintain the development of the Terang Sirasun field, which is located in the Kangean block.

"BP has engaged in discussion with parties which share BP's desire for safe and continuous natural gas supply to East Java as well as seeing the development of the Terang Sirasun/Batur field," Budi said.

Budi also declined to reveal the interested investors, saying the matter was confidential.

BP Indonesia is seeking a contract extension for the management of the Kangean block which is due to expire in 2010. Extension of the contract would enable the company to explore Terang Sirasun field, which should help resolve gas shortage problem in East Java. The government has yet to decide on the request.

BP has operated the Kangean block since 1980. First production started in 1994 from the Pagerungan Gas Plant. According to Oil and Gas Upstream Regulatory Body (BP Migas), Pagerungan supplies between 150-175 million standard cubic feet (MMSCFD) of gas.

BP supplies state electricity firm PT PLN, state gas distribution firm PT PGN and Petrochemical Gresik.