BP-Migas urges Pertamina to speed gas contract termination with Enron
Thursday, November 21 2002 - 02:53 AM WIB
?If Pertamina could terminate the contract quickly, gas reserves in ExxonMobil?s gas field in Madura Strait, East Java could be brought into production by 2006 at the rate of 120 million standard cubic feet per day (MMCFD). That would help a lot to ease East Java gas supply shortage,? Kardaya Warnika, vice-chairman of BP-Migas told reporters on a sideline of parliamentary hearing in Jakarta.
Pertamina had been trying to terminate the contract for several years.
In 1997, Enron through its 51 percent subsidiary PT East Java Power Corp (EJPC) signed an agreement with Pertamina to supply up to 30 MMCFD of natural gas to EJPC?s 500-megawatt power plant under development in Pasuruan, East Java. The gas would be supplied from ExxonMobil-operated Madura BD field offshore of East Java in the Madura Strait. The power plant was originally scheduled to operate in 1998.
Under the previous oil and gas law, Pertamina represented government and contractors to sign sales agreement with natural gas buyers.
Enron?s partners in EJPC included Bambang Trihatmodjo, son of the-then president Soeharto and his crony Ibrahim Risjad. By 1997 the Indonesian economy collapsed and Soeharto was overthrown. The resulting economic mess forced Indonesia to default on its payments for the Enron power plants.
The Enron power project was suspended indefinitely in September 1997, after the power purchase agreement had been signed and the gas contract was completed with Pertamina. Enron officials objected to the suspension because the final financial close on the power plant was reported to be only days away.
Since then, activities to construct gas facilities in Madura BD stopped.
Madura BD has 600 billion cubic feet of gas reserves.
ExxonMobil, the Madura BD operator hold 68.6 percent working interest in Madura BD block, while Canadian oil company Husky Oil holds the remaining 31.4 percent. (alex/godang)