BP Migas to penalize 16 ?failed? contractors

Oil and gas upstream authority BP Migas plans to impose penalty on 16 oil and gas contractors for failing to fulfill its investment commitment during exploration.

BP Migas? chairman Kardaya Warnika said on Tuesday as a result of their failure to fulfill its investment commitment, the contractors would be obliged to increase the size of the concession they had to relinquish after the end of the third year of exploration.

He said the penalty conformed to the contractual terms signed by the contractors with the government.

?Under the contract, if a contractor fails to fulfill its (investment) commitment in the first three years of exploration, the portion of concession it has to relinquish to the government will be increased to 35 percent from 25 percent,? Kardaya said.

Under contracts, oil and gas companies have to gradually relinquish parts of their concession to the government after explorations until they find areas which they would like to retain for development.

The 16 companies that have failed to realize their investment commitment are KNOC NEM I which explores NEM I Block, KNOC NEM II (NEM II Block), Orna International Ltd (Rembang Block), PEARLOIL (Satria) Ltd (Bulu Block), PT Sele Raya Merangin Dua (Merangin Dua Block), Tately Palmerah (Palmerah Block), Eksindo Petroleum Bontang (Bontang Block), Asia Petroleum Development (Biliton Block), Continental Geopetro (Bengara II Block), Nation Petroleum (Rombebai Block), Nation Petroleum (Yapen Block), Energy Equity (Bone Bay Block), Irian Petroleum (Manokwari Block), Inparol (Asmat Block), Altar Barito Kalimantan (Barito Block), Kutai Etam Kalimantan (Seinangka Senipah Block).

Aside from the 16 companies, Kardaya said there were two contractors who have suspended operations due to financial difficulties. They are Titan Resources (North East Natuna Block) and PT Cahaya Batu Raja (Air Komering Block).

Kardaya did not specify the actions that would be taken by BP Migas on the two firms. (Godang)