Wed, 15 Jan 2003

Pertamina condemns BP over gas leak

A'an Suryana, The Jakarta Post, Jakarta

Pertamina president Baihaki Hakim has blamed Anglo-American energy giant BP Plc. for recent gas leaks in the Pagerungan gas field in Madura, East Java.

He said on Tuesday the leaks were partly due to BP's negligence in maintaining the gas pipeline.

"As a professional in the business, BP should have anticipated a possible gas leak. However, it failed to deal with it," Baihaki said.

The gas leaks have forced BP to shut down five gas fields in the Pagerungan contract area, which has reduced gas supply to 100,000 million cubic feet per day (MMCFD) from 180,000 MMCFD.

According to reports, hundreds of firms in East Java that use gas as source of energy have been badly affected by the shutdown.

BP has said the gas leaks occurred because a number of pipes that were "worn out". The company has promised to fix the pipes in 20 days.

Company officials were not available to comment on Baihaki's statement.

Baihaki said BP's negligence was not tolerable because it could seriously affect the operations of numerous companies, including state-owned electricity company Indonesia Power, which supplies electricity along the Bali-Java network.

He said the government should not extend the contract of BP to manage the Pagerungan gas fields when it expires, because this incident indicated that BP was not fully commitment to ensuring the gas supply in East Java.

He said the government should instead give local oil and gas firms the opportunity to run the gas fields.

Baihaki said the gas leaks should teach the government an important lesson: that in future contracts penalties must be stipulated for the failure to meet certain targets.

He said that Pertamina might also have to shoulder the cost of repairing the Pagerungan gas pipelines under a "cost recovery" mechanism.

He said the repairs would cost about US$500,000.