BP?s gas contract in Terang Sirasun to be extended early next year

Oil and gas upstream authority BP Migas confirmed that the contract for Terang Sirasun gas field in East Java, which is operated by Anglo-American oil, gas giant BP Plc. would be extended early next year, Bisnis Indonesia newspaper reported on Friday.

BP Migas chief Rachmat Sudibyo said the government would issue a regulation regarding upstream sector, which includes contract extension clauses at the end of this year.

?The regulation will regulate the extension of various contracts. Thus, the contract of Terang Sirasun can be extended early next year, Rachmat told reporters at the ministry of energy and mineral resources building in Jakarta on Thursday.

BP had requested for the extension of its production sharing contract in the Kangean Block which includes Terang Sirasun gas field. BP?s contract on Kangean block would expire in 2010. BP had repeatedly said it would only be willing to develop nearly 1 TCF gas reserves in Terang Sirasun only if given contract extension.

Rachmat said the increase in gas production would be crucial to help meet the growing demand in East Java province.

Gas demand in East Java is currently at around 424 MMCFD (million cubic feet per day) but it is expected to increase up to 600 MMCFD in 2007.

But supply from East Java gas producers has now declined sharply to 290 MMCFD from 390 MMCFD previously. This is partly due to a drop in the gas reserves in the Kangean block.(*)