Legislators demand review of BP?s Kangean contract

House members said on Thursday they support any plan to renew BP Indonesia?s gas contract for Kangean Block in East Java but demand that the contract be amended, Koran Tempo daily reported on Friday.

The legislators argue that the Kangean Block contract is not favorable to the state. They pointed to the preferential rights given to BP to supply gas to East Java from Kangean block. Other parties can supply gas to the province only if BP allows them to do it.

BP had asked for an extension for Kangean Block contract so it can develop Terang Sirasun field which is part of the block. The current contract will expire in 2010.

?The contract should be renewed, but it needs to be reviewed first,? said Agusman Effendi, vice chairman of House commission in charge of energy and mineral resources, after attending a closed-door meeting between commission members and BP officials at the House.

Another commission member, Priyo Budisantoso admits BP?s request for contract extension is understandable. He said however the contract must be reviewed so that the state could get more from Kangean Block.

?We will conduct thorough analyses over this matter,? Priyo said on the same occasion.

Earlier, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government needs House support for extension of BP?s Kangean contract and for the development of Terang Sirasun gas field.

BP?s insistence to develop Terang Sirasun field was due to the depletion of gas reserve at Pagerungan field in Kangean Block.

Pagerungan reserve has unexpectedly dropped to between 300 million cubic feet per day (MMCFD) to 240 MMCFD. This has caused a sharp decline in gas supply to both household and industrial users in East Java, which needs gas supply of at least 800 MMCFD. (*)