BP Indonesia threatens to abandon $400m gas field development

BP Indonesia said Tuesday it would abandon plans to invest US$400 milion to develop a gas field off East Java unless the government agrees to extend its production-sharing contract by 20 years.

The original contract with state-owned energy company Pertamina for the Terang Sirasun field expires in November 2010.

"We are seeking another 20 years on top of that," BP Indonesia president Bill Schrader told AFX-Asia, an AFP-owned financial newswire.

"We won't build the field if we don't get the extension."

Schrader said the BP Plc board would not approve the 400 million dollar investment without a contract extension because it would not be economically viable.

He said it would take at least three years to develop the field and by 2010 "we would still have half of our reserves sitting in the ground".

The company estimates production of 350 million cubic feet (10.5 million cubic meters) per day, which would be delivered to a pipeline servicing the Java region.

The field has gas reserves of one trillion cubic feet. (*)