PLN close to sign SPA with ConocoPhillips, BP: BP Migas

Upstream oil and gas authority BP Migas said Friday that US oil, gas giant ConocoPhillips and Anglo-American energy giant BP Plc. are closer to sign gas sales and purchase agreements (SPA) with state electricity firm PLN after the two companies agreed to ease standby letter of credit (SLBC)coverage requirement.

?We hope SPAs on ConocoPhillips? Corridor block gas in South Sumatra to PLN?s power plants in West Java and BP?s Offshore Northwest Java (ONWJ) gas to PLN?s power plant in Jakarta could be signed within a month?s time,? said BP Migas vice chairman Kardaya Warnika.

Kardaya said ConocoPhillips and BP had agreed to shorten SBLC coverage from one year to only 4 months. ?But three other producers; Amerada Hess, Santos Ltd and BP Muria still stick to their original demand to ask fro one year SLBC blanket guarantee.

PLN is negotiating to buy 850 MMCFD of gas from the five producers, and the SLBC PLN must provide to guarantee 1-year volume is estimated to be around US$600 million, which posed heavy financial burden for the troubled electricity firm.

Under the deal, ConocoPhillips is expected supply PLN?s power plants in western part of Java starting 2007 at peak rate of 400 MMCFD, while the deal with BP ONWJ is contract renewal to supply gas to its power plants in Jakarta, which will expire in December this year. (godang)