Purnomo hints extension of Kangean block contract

The government has hinted that it would extend the contract for the exploration and production of the Kangean gas block in East Java to help meet the sharp increase in the gas demand in the province, Neraca daily reported on Monday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Surabaya last week that if the prospect of the gas block remained promising, it would be better for the government to extend the contract.

However, he warned that if the contract of the gas block is extended, there should be some change in its term and conditions so that that new contract would be more fair for both operator and government.

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 company Petronas.

Before the sales of the two oil blocks, BP Indonesia had asked for an earlier extension of the contract of two oil blocks 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.(*)