Pertamina asks govt not to renew BP?s gas contract
Monday, May 13 2002 - 02:50 AM WIB
Pertamina?s director for production sharing contracts (PSC), Effendi Situmorang, said in Jakarta over the weekend that BP?s requirement to renew its contract which would expire only in 2010 was premature and not realistic.
"BP?s requirement to renew the contract which will expire in 2010 was too early. It should be made at least in 2007 or 2008," he was quoted as saying. Effendi also assured that Pertamina would be able to solve the acute shortage of the gas supply in the province by opening its Terang field in the same gas block.
"It will not be difficult for Pertamina to develop the Terang field because the company has installed a 400-kilometer pipeline in the area to distribute the natural gas. More over there are a number of oil companies have expressed interest to operate the oil field. Not only Amerada Hess and Pertamina, but it relies on BP, it will surrender it or not," he said.
BP?s Vice President for Operation of Kengean field, Dharma Jenie said that the company?s requirement to renew the contract was in line with the government?s plan to remove the exclusive rights given to the company to distribute gas in East Java.
"We want the two as one package. It can not be separated from one another," Dharma said.
As reported earlier, the gas supply in East Java has continued to worsen lately due to a decline in the gas production from BP?s Pegerungan gas field in the Kangean block in the province. BP, which has been given exclusive rights to produce and distribute gas in East Java, has seen its gas production depleting much earlier than it expected.
The gas production from the company?s Pegerungan field has dropped to between 300 million cubic feet per day to 240 million cubic feet per day. This has caused a sharp decline in the gas supply to both household and industrial users in the province, which need gas supply of at least 600 million cubic feet per day.
BP has said that it is able to increase the gas production to 600 million cubic feet per day, if the government extends the existing contract to produce gas in its East Java concession area.
Suara Karya reported that the company would not receive any penalties from the government although it failed to fulfill the gas demand in the province.
"BP will not face any penalties even if it fails to meet the gas demand because under the existing contract, the company is given a preferential right to supply gas of up to 600 million cubic per day. If it not achieved, there is no problem," said K. Silaen, the public relations manager for Pertamina?s production sharing contracts.
Meanwhile a member of the House of Representatives (DPR) said that House would reject any proposal to use fuel to cope with the shortage of gas supply in East Java.
Agus Effendi, the vice chairman of the House?s Commission VIII, said that if the government would use fuel as the substitute of the gas supply in the province, the state budget which has already fixed the fuel allocation for this year should be revised.
But it would be difficult for the House to approve the increase in the fuel supply, which has been fixed at 52.7 million kilo liters for this year, he said, adding that raising gas production from the existing gas fields was the only feasible solution to cope with the shortage of the gas supply. (*)