Saka seeks amendment of Kepodang gas supply contract

Upstream company PT Saka Energi Indonesia, a subsidiary of IDX-listed PT PGN Tbk, has called for an amendment of the Kepodang field gas supply contract following recent declaration of a force majeure as the field?s reserves have been depleting faster than initially projected, rendering the field to be unable to fully fulfill the contracted volume, Kontan reported on Monday.

?All interested parties including Saka, Petronas, Kalimantan Gas Jawa, and PLN must review the gas supply contract as well as the penalty that must be paid by the gas producer if it could not deliver the agreed production target,? said Saka President Director Tumbur Parlindungan told the paper.

Saka owns 20 percent interest in Muriah PSC, East Java, where the Kepodang field is located, while Malaysia?s Petronas Carigali Muriah Ltd controls 80 percent interest. The Kepodang field, which started production in 2015, was supposed to supply gas via pipeline operated by PT Kalimantan Gas Jawa (KGJ) to the 800 MW Tambak Lorok combined-cycle power plant in Central Java owned by state-owned electricity firm PT PLN until 2026. But given the faster depletion rate in the gas reserves, due to overestimation of the field?s reservoir, the supply contract may have to be stopped in 2018.

Petronas last month declared force majeure for the operation of Kepodang field as the company only managed to supply 70 mmcfd of gas to PLN from the contracted volume out of 110 mmcfd.

Tumbur said that the declaration of the force majeure was essential to among others allowed negotiation of the penalty.

Senior Manager for Corporate Affairs and Administration at Petronas Carigali Indonesia, Andiono Setiawan could not immediately give confirmation over the request for the gas supply contrat amendment. ?I must coordinate first with the country chairman,? he said. (*)