Government considers to extend contract of Sengkang gas block

The government is considering to extend the production sharing contract (PSC) awarded to Equity Epic Sengkang Pty Ltd of Australia to operate and manage the Sengkang gas block for another three year from 2020 to 2023, Koran Tempo reported on Monday.

Director General of Oil and Gas of the Ministry of Energy and Mineral Resources Iin Takhyan said in Jakarta last week that his office was still studying the proposal for the extension of the contract awarded to the Australian company.

"We should first see the result of the feasibility study before deciding to extend the contract," he said.

BPMIGAS, the government?s agency in charge of oil and gas exploration and production, has formally recommended the extension of the contract to the ministry. The agency sees the extension of the contract is needed as the compensation for the cut in the price of the electricity sold by Equity Epic to PLN.

Equity Epic uses most of its gas production from the Sengkang gas field to supply the gas need of its 135 MW-power plant which is also located in Sengkang. The company proposed the extension of the contract to Pertamina in 2000 but the proposal was turned down. BPMIGAS, which took over the oil and gas supervisory task from Pertamina in 2001, accepted the proposal and recommended the Ministry of Energy and Mineral Resources to extend the contract for another three years.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that he understood the need for the extension of the contract. But he did not say when the extended contract would be formally signed. (*)