BP urges reserves development to ease E. Java gas supply shortage

Anglo-American energy giant BP Plc. said on Tuesday that the company welcomed any contractor who wanted to supply natural gas to East Java to help easing gas supply shortage that began to hit the province.

?It is evident that BP would not be able to supply natural gas to meet the need of East Java. Therefore, despite preferential right that we are currently holding, we welcome any contractor that wish to develop its gas reserve to sell the gas to East Java,? said Satya W. Yudha, BP Indonesia Vice President for Government and Public Affairs Tuesday.

East Java had been hit by gas supply shortage due to demand growth and steady production decline from BP?s Pagerungan gas field in Kangean production sharing contract (PSC) area which supplies most of East Java gas needs.

Satya said production from Pagerungan field currently stood at 260 million standard cubic feet per day (MMCF) and would continue to decline due to reserve depletion. In the past years, said Satya, total gas production from Pagerungan field to costumers had been 325 MMCFD. He estimated average gas production in 2002 would be at 226 MMCFD.

East Java gas buyers fertilizer maker Petrokimia Gresik, state electricity firm PLN and state gas distribution firm PGN currently need some 400 MMCFD of gas. Another gas suppliers are Lapindo Brantas and Kodeco which supply some 40 MMCFD combined.

BP holds the preferential right to supply up to 600MMCFD to East Java until its production-sharing contract expires in 2010. The preferential right had been blamed as the major stumbling block for other gas contractors to develop their gas reserve and sell the gas to East Java.

?We have no intention to block any gas supplier from entering East java market because we know BP alone would not be able to supply the whole East Java gas needs. On the contrary we urge contractors to develop their gas reserves to help solving supply shortage that will become more severe in the years to come,? he said.

Satya also urged the government to support fast track development of all identified gas resources in East Java.

According to the data obtained by Petromindo.Com, if no now gas supply enters East Java market, average supply demand gap in 2005-2010 is forecasted at 275 BBTU per day, which is about equivalent to 2.7 million kiloliters of fuel oil per year.

Lapindo Brantas and Kodeco is expected to increase their gas production to 90 MMCFD in the next few years, while Amerada Hess would bring gas from its Pangkah field to East Java market at the peak rate of 100 MMCFD in 2004.

BP had been trying to get the government to extend Kangean PSC to enable the company to develop Terang-Sirasun field which could supply 300 MMCFD of gas to East Java to offset production decline from Pagerungan field. (alex)