Pertamina seeks revised E. Java gas Supply deal with BP
Thursday, April 18 2002 - 01:59 AM WIB
By Friday, Pertamina will present to the Indonesian unit of BP PLC (BP) for signature a document outlining the removal of its preferential rights, said Effendi Situmorang, Pertamina's senior corporate vice-president for production sharing management.
Tuesday, Effendi said BP is "holding Indonesia hostage by not relinquishing its gas supply monopoly in East Java."
BP has been viewed as hanging on to privileges even though its depleting gas production has fallen short of local demand. A take-or-pay clause in BP's contract has prohibited the entry of new producers who could make up for the supply shortfall.
Earlier this year, Pertamina signed a memorandum of understanding with Amerada Hess Corp. (AHC) for the latter to produce 150 million cubic feet a day of gas from Ujung Pangkah by 2004.
"We will ask BP to give up at least 224 million cubic feet a day of gas (in take-or-pay supply rights) to protect Amerada Hess and other producers," said Effendi.
Budiman Parhusip, vice-president for BP's East Java gas business said Tuesday BP was "willing to revise the contract and to relinquish the privileges as we have no deliverable gas (to meet the original contractual terms)."
Budiman hasn't been informed about the document being prepared by Pertamina. But Pertamina is adamant about obtaining the oil major's signature to arrest the East Java supply shortfall.
"They have to sign it, not just say it," Effendi said Wednesday.
BP's signature is crucial if both parties hope to resolve outstanding issues including BP's pursuit of an extension for its Kangean production sharing contract which expires in 2010. BP wants the extension to justify a $400 million Terang/Sirasun gas development project in the Kangean PSC block.(*)