Kunlun announces termination of Bengara-II PSC

By Ruli Setiawan

Kunlun Energy Ltd formally announced the termination of exploration contract for Bengara-II production sharing contract (PSC) by the now-defunct BPMIGAS after several years of trying to seek its extension.

The company said in a press statement on Tuesday that on 10th July 2006 Kunlun Energy Company Limited acquired 70 percent issued share capital of Continental-GeoPetro (Bengara-II) (CGB2) which owns an undivided 100 percent participating interest in the Bengara-II PSC which has a term of thirty years.

Under the Bengara-II PSC, the exploration phase expired on 30 November 2011. The Company and CGB2 had since April 2011 been actively negotiating with BPMIGAS ? now SK MIGAS ? for a further extension of the exploration phase for two years.

Despite the continuous efforts of the Company and CGB2 in negotiating with BPMIGAS for further extension, on 24 August 2012, BPMIGAS issued a letter to CGB2 stating that the Bengara-II PSC was expired as of 30th November 2011. No reason was specified in the said letter.

The Company has sought the opinion of its Indonesian counsel regarding the expiry of the Bengara-II PSC and was advised that under the applicable Indonesian laws and the Bengara-II PSC, BPMIGAS has no obligation to grant another extension other than the four-year extension period immediately after the initial six years of the exploration phase. In view of the opinion of the Indonesian counsel, the Company has decided not to pursue further application/request for extension of the term of the Bengara-II PSC.

Editing by Benget Besalicto Tnb.