Govt likely to extend BP?s Kangean PSC: Official

The government will likely decide to extend BP?s production sharing contract (PSC) for Kangean Block off the East Java coast and suggest that BP cooperate with state oil and gas firm Pertamina to operate gas fields in the block, a senior official said Wednesday.

?The government views that it needs to extend Kangean PSC, based on economic considerations,? oil and gas director general Iin Arifin Takhyan said.

BP had invested big amounts of funds to develop the block, Iin Arifin argued.

Meanwhile, the government has yet to make final decision on whether or not to extend the Kangean block contract. The House had deliberated that matter and reportedly had submitted recommendations to the government late last year. One legislator said the House supported contract extension.

BP operates Kangean Block through its Indonesian unit BP Indonesia. The block contract expires in 2010, and BP had requested government approval for another 20-year extension.

Iin Arifin said: ?After its contract is extended, BP could cooperate with Pertamina to carry out activities in the area.?

Some parties want Indonesian investors including Pertamina operating the block after 2010.

BP argued that it would start producing natural gas in Kangean?s Terang Sirasun field only if contract for Kangean Block was extended. (godang)