House set to recommend extension of BP?s Kangean PSC this week

The House of Representatives (DPR) is set to recommend this week extension of BP?s Kangean production sharing contract (PSC), a source at the House told Petromindo.Com on Monday.

?Commission VIII will submit its recommendation to the government before Nov. 29. The recommendation will clearly ask for extension of Kangean PSC,? said the source.

DPR will have a month-long recess, starting from Nov. 30.

DPR?s commission VIII in charge of energy and mineral resources is scheduled to meet on Monday to finalize the formulation of its recommendation.

?Practically, the meeting will be only for making some minor correction on the wording of the recommendation document,? the source said.

Under existing laws, the government can extend oil and gas contracts only with approval from the DPR.

BP had requested government approval to extend for another 20 years its Kangean PSC of the East Java coast. The contract expires in 2010.

BP argued that it would start producing natural gas in Kangean?s Terang Sirasun field only if the government extends the Kangean contract.

Natural gas supply from Pagerungan field in Kangean has continued to decrease over the past months due to reserve depletion. This has caused acute gas shortage in East Java.

The government had given BP preferential rights to supply natural gas to East Java from Kangean. (leo)