Extension of Aceh Block A contract nears

After a series of delays, the government will decide on a contract extension of the gas-rich Block A in East Aceh later this month.

"The directorate general of oil and gas is discussing the issue and expects to make a decision this month," upstream oil and gas regulator BPMigas' deputy of operations Budi Indianto told a hearing with the House of Representatives? energy commission on Thursday as quoted by Antara.

Medco E&P Indonesia, a unit of IDX-listed energy firm PT Medco Energi Internasional Tbk holds a 41.67 percent participating interest in the block and is the block?s operator. Medco partners with Premier Oil Sumatera (North) BV and Japex Block A Ltd, which have participating interests of 41.67 percent and 16.67 percent respectively.

The contract is to expire by 2011, but the government has said several times that the contract will be extended as the gas from the block will be important for local industry and power plants.

Budi said the block would start production in 36 months after the contract was extended.

The block will supply 110 MMCFD of gas to Aceh fertilizer maker PT Pupuk Iskandar Muda and 15 MMCFD to a power plant operated by state power firm PLN in East Aceh.(*)