No guarantee yet for extension of Kangean contract

The change in the ownership of the Kangean and Muria gas blocs will not guarantee that the contracts of the gas blocks that would end in 2010 would be extended, a senior official of BP Migas, the government's oil and gas authority, has said.

"At least, the change in the ownership of the two gas blocks will affect the government's bargaining position in the extension of the contracts," Kardaya Warnika was quoted by Neraca daily as saying.

Earlier newspaper reports said that BP Indonesia had sold its entire interest in Kangean gas block in East Java and Muria gas block in Central, respectively, to local company PT Energi Mega Persada and Malaysian state oil and gas company Petronas.

Before the sales of the two oil blocks, BP Indonesia had asked for an earlier extension of the contract of two oil blocs but the government did not give positive response on the ground that the oil giant gave no serious commitment in the future development of the gas blocks.

BP's contract in the two oil blocks would actually ends in 2010 but the company has asked for earlier extension of the contract until 2030.(*)