Govt, House team completing study on BP?s request for E. Java PSC extension

A special team of government officials and members of the House of Representatives is continuing to study BP Plc?s request for government approval to extend its Kangean production sharing contract (PSC) in East Java, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Monday.

The government would make final decision on BP?s request based on recommendations from the team, Purnomo told reporters at his office.

The minister did not say however when the team?s work would end.

Purnomo only said that final decision on whether to extend the Kangean natural gas block contract would be based on political and technical considerations.

BP?s contract for the Kangean block will expire in 2010, and it had asked for 20-year extension so that it could develop Terang Sirasun gas field in that block. Gas reserves at the current Pagerungan field, located in the same block, is depleting, making it impossible for BP to supply enough natural gas to East Java.

BP said early this month that it could flow only 200 million standard cubic feet per day (MMSCF) of gas to East Java, and that the volume might drop to 150 MMCFD in 2003.

East Java?s total demand for gas presently reaches 400 MMCFD.

BP has preferential rights to supply natural gas to East Java, but a drop in its gas supply to the province had caused acute gas supply shortage in the region over the past months.

The government had considered to allow other investors to supply natural gas to East Java. (godang)