Chevron eyeing C. Sumatra block contract extension

Chevron Pacific Indonesia (CPI), an Indonesian unit of US energy giant Chevron Corp. has submitted proposal to extend contract of Siak block in Central Sumatra for another 20 years, an official with upstream oil, gas authority BPMIGAS said on Wednesday.

Spokesman Elan Biantoro told reporters that Siak block?s current contract will expire in 2013. The block?s contract was first extended for 20 years in 1993 the block has been operated by CPI since 1963.

Currently, Siak block produces around 2,000 BPD of oil, Elan said with significant upside potential, Elan said. According to senior CPI official Usman Slamet, the block reached peak production of 6,800 BPD in 1977.

Elan, however, said that the proposal submitted by CPI was not valid as it did not attach specific plan about the block?s development and investment commitment, which will justify the granting of contract extension.

?If CPI is still interested to extend the block?s contract, it must submit detailed proposal by November 2011, or 2 years before contract expiration,? he said.

Under the Indonesian production sharing contract system, contractor whose contract will expire must submit proposal to BPMIGAS for contract extension. BPMIGAS, will evaluate the proposal and make recommendation to the Ministry of Mineral Resources, which holds authority to extend the contract.

CPI, which operates several oil blocks in Central Sumatra, is currently Indonesia's number one oil producer.(bernard/godang/giok)