Govt agrees to extend Kangean block contract
Govt agrees to extend Kangean block contract
The Jakarta Post, Jakarta
The government has agreed to extend the gas contract in the
Kangean block, East Java, operated by Anglo-American energy
company BP Plc in order to help overcome the gas shortage in the
province.
Iin Arifin Takhyan, Director General of Oil and Gas at the
Ministry of Energy and Mineral Resources said the extension of
the production-sharing contract would be made when the government
regulation on oil and gas upstream business had been issued.
"In principal, we agree (to extent the contract) because
gas shortages in East Java can only be dealt with by extending
the natural gas contract in Terang Sirasun," Iin told reporters
after a hearing with the House of Representatives on Wednesday.
The contract with BP Plc at Kangean block where Terang Sirasun
field will expire in 2010.
"The regulation will provide a legal basis for the extension
of the existing contract. It will allow investors to extend their
contracts 10 years prior to their expiry," Iin explained. In the
previous regulation, investors could only extend their contract
two years before expiry.
The draft of the regulation is still at the State Secretariat,
and has yet to be signed by President Megawati Soekarnoputri.
Iin said the extension of the Kangean block contract had been
proposed a year ago but there had been suspicions of collusion as
the extension was proposed years before its expiry period.
The extension of the contract would allow BP Plc. to explore
new natural gas reserves in Terang Sirasun to bring in a greater
gas supply for East Java. BP supplies natural gas for the
province along with other producers.
Based on data from the Oil and Gas Upstream Regulatory Body
(BP Migas), natural gas demand in East Java for power plants, gas
distribution company PT Perusahaan Gas Negara (PGN) and
petrochemical companies reached 424 million cubic feet per day
(MMSCFD) in 2002. It is projected to increase to 573 MMSCFD in
2007.
However, the ability of natural gas fields around the province
have been steadily declining from 390 MMSCFD in 2002 to 290
MMSCFD.
It is projected that the exploration of new gas reserves in
Terang Sirasun will bring an additional natural gas supply of 300
MMSCFD.
East Java gets natural gas from BP's Lapindo Brantas (80 -
100 MMSCFD), Pagerungan fields (150-175 MMSCFD), Ujung Pangkah
operated by Amerada Hess (100 MMSCFD), Oyong (40 MMSCFD) and
Maleo (100 MMSCFD) and Kodeco (100 MMSCDF).
Ujung Pangkah is scheduled to produce natural gas in 2005 and
Santos in 2006.