Purnomo inaugurates Hess? LPG production plant

American oil and gas firm Hess Corp. has started producing liquefied petroleum gas (LPG) at its Ujung Pangkah block offshore East Java, seeking to capitalize on the rising demand for the fuel on the local market.

The firm invested to US$1 billion to build an LPG plant at the block, which was inaugurated by Minister of Energy and Mineral Resources Purnomo Yusgiantoro on Monday, according to a press statement from the ministry.

Also present during the ceremony to inaugurate the LPG production facilities were Director General of Oil and Gas Evita Legowo, chairman of oil and gas downstream regulatory body BPH Migas Tubagus Haryono and deputy chairman of oil and gas upstream regulatory body BP MIGAS Abdul Mu?in.

The ministry said Hess will sell its product to the local market. Demand for LPG has sharply increased following the government?s program to push households to use LPG rather than kerosene for cooking.

As a matter of fact, Hess started LPG production there in April this year. BPMIGAS said in its website that Hess will initially produce 3,000 barrels per day of LPG and the output will ramp up to 6,000 bpd by the end of 2010. The plant will be fed with gas from the Ujung Pangkah block.

Ujung Pangkah currently produces 85 MMCFD of gas and 5,500 bpd of liquids.

Hess has a 75 percent stake in the block with Kuwaiti oil, gas firm KUFPEC holding the balance. (godang)