ConocoPhillips, PLN in gas supply talks

Upstream oil and gas authority BPMIGAS said on Monday that US oil firm ConocoPhillips is in talks with state electricity firm PLN over gas supply from Suban gas field in Corridor block PSC to PLN?s power plants in western part of Java.

BPMIGAS Chairman Kardaya Warnika told a parliamentary hearing in Jakarta that the ConocoPhillips might supply PLN at 400MMCFD rate. ?Talks are still ongoing. We don?t have yet the exact time frame when the agreement will be sealed nor the delivery date,? he said.

ConocoPhillips and PLN had held similar talks a few years back but the deal went sour after PLN could not issue standby letter of credit (SLBC) to guarantee its gas purchase. ConocoPhillips then sold its gas to state gas distribution firm PGN, which are constructing gas pipeline to link South Sumatra to West Java. The pipeline will become operational in 2007.

PLN is scrambling to find gas supply for its power plants in West Java as current supplies are dwindling. The company is forced to burn much more expensive fuel oil for the power plants. Earlier, a PLN official also said that PLN was negotiating with PGN to buy part of ConocoPhillips gas that PGN bought. (godang)