Indonesia may cancel gas sale to Singapore

US oil firm ConocoPhillips may not be able to sell gas from Corridor Block PSC onshore South Sumatra to Singapore?s Island Power Company as thus far the latter is not able to meet some condition set by gas sales agreement (GSA), an upstream oil and gas authority official said on Tuesday.

BPMIGAS Deputy Chairman in charge of marketing Eddy Purwanto told Petromindo.com that some of condition precedent mandated by GSA has yet to be met by Island Power, a wholly owned subsidiary of global power firm InterGen. He, however, declined to give further detail.

ConocoPhillips and Island Power signed GSA on July 2003, under which some 100 MMCFD of gas would be supplied to the latter?s power plant in Singapore starting H2 2006 for 15 years. Eddie said lack of condition precedent fulfillment had caused gas supply delay to Island Power.

An industry source told Petromindo.Com that Singapore?s Energy Market Authority (EMA), which oversees the country?s energy, did not issue clearance for the transaction, thus putting the GSA in limbo. EMA has been planning to build LNG receiving terminal in Singapore to cut supply dependency from its neighboring countries such as Indonesia and Malaysia and to avoid power blackout due to supply disruption from piped gas like the one that hit the country in 2003.

The source said that BPMIGAS might order ConocoPhillips to divert the gas that are originally appropriated to Island Power to meet domestic market. ?However, up to now, there?s no definitive decision,? the source said. ?BPMIGAS and Indonesian government is now seriously considering to axe the GSA and put the gas to the booming domestic market,? the source said.

ConocoPhillips Indonesia officials contacted by Petromindo.Com for confirmation did not return calls.

BPMIGAS Chairman Kardaya Warnika in an earlier interview also refused to comment specifically on the matter, but said that BPMIGAS is trying to put as much gas as possible to meet booming domestic market.

ConocoPhillips holds 54 percent working interest in Corridor Block PSC with Talisman Energy and Pertamina holding 36 percent and 10 percent, respectively. The block is currently supplying gas to crude producer Chevron Pacific Indonesia and will start delivering gas to PGN through South Sumatra-West Java pipeline next year with peak flow rate of 400MMCFD. (godang)