Pertamina rejects BP proposal

BP Indonesia, the production sharing contractor of the Tangguh gas field in Papua, has proposed to the state-owned oil and gas firm Pertamina to include the cost for engineering procurement contract (EPC) into the ?cost of recovery? although it has yet to secure the market for the LNG (liquefied natural gas).

Under the existing contract system, the cost of EPC can only be transferred into the cost of recovery if the contractor has managed to secure market for its gas project.

But the Koran Tempo daily quoted BP Indonesia vice president for public relations Satya W. Yudha as saying on Wednesday such system could only be applied in the past when the position of the sellers was quite strong in the market. He said that now the position of the buyers was stronger.

Director of production sharing management of Pertamina Effendi Situmorang said that the proposal was unfair. He said that until the contractor could secure the market for its gas project, the EPC cost must be shouldered by the contractor.

He said that oil and gas contractor coming to Indonesia must bring cash, expertise, and technology. ?If they don?t bring those (three), I said we don?t need them.?

BP Indonesia is trying to win a market in China?s Guangdong province for the Tangguh LNG. BP is optimistic it could win the tender. The Chinese authority is expected to announce the winning bidder in April. A China delegation is expected to visit Tangguh on March 24.(*)