BP?s exclusive rights over gas sales will be removed this month
Friday, September 6 2002 - 03:45 AM WIB
"The removal of BP Indonesia?s exclusive rights will be officially signed this month," the head of the agency, Rachmat Sudibyo was quoted as saying by the newspaper.
With the removal of BP?s exclusive rights, the sales of natural gas from producers to industrial buyers in the province will be coordinated by Pertamina. "Pertamina will remain as the coordinator of the gas distribution," Rachmat said.
BP Indonesia was given exclusive rights in 1980 to sell natural gas to industrial users in the province as part of the deal it received from the government in developing its Kangean gas block in the province. With such privilege, other companies intending to sell their gas in the province should receive approval from the British oil and gas giant.
But BP Indonesia has in recent years failed to meet its commitment to supply about 600 million cubic feet of gas per day due to the decline in the company?s production. This has caused a major shortage in the gas supply to state owned gas distribution company PGN and other industrial users such as state owned electricity company PLN, PT Petrokimia Gresik.
The exclusive rights awarded to BP Indonesia is actually valid until 2010 but a continued decline in its gas supply has prompted the government, through the Implementation Body, to terminate the privilege earlier that the initial schedule.
The decline in the gas supply has forced the company to spend at least Rp 1.4 trillion to buy diesel fuel to substitute the gas. In addition, Pertamina and the government have also relocated gas distribution from other producers to cope with the supply shortage. PLN?s gas demand is, for example, supplied by BP and Kodeco, PGN by Lapindo and Amerada Hess while Gresik by BP. (*)