VICO declares inability to meet gas supply commitment to Bontang

East Kalimantan gas producer VICO Indonesia has recently declared inability to fully meet its gas supply commitment to Bontang LNG plant due to reserves depletion, a BPMIGAS official said.

BPMIGAS Deputy Chairman in charge of Planning Ahmad Lutfi told Petromindo.Com recently that VICO has formally declared insufficiency of its reserves in Sanga-Sanga PSC to fully meet LNG supply commitment to traditional buyers; Japan, South Korea and Taiwan.

Lutfi, however declined to revel further detail about current supply condition of Sanga-Sanga PSC. He only said that BPMIGAS is currently evaluating VICO?s gas supply ability. ?It?s too early for VICO to declare such statement as the company has yet fully explored prospects within their area and developed its recent findings such as Mutiara field,? he said.

A Petromindo.Com source said VICO is experiencing severe gas production shortfall beyond their calculation.

Bontang LNG plant is currently experiencing acute shortage of gas supplies as two of its suppliers, Chevron and Vico Indonesia, were unable to supply the contracted volume, causing Bontang to cut LNG shipments to Japan, South Korea and Taiwan. The shipment cuts are projected bigger in 2007 and 2008 as gas supplies from Vico is expected to be dwindling due to declining reserves and Chevron?s new gas fields will not be coming onstream until at least 2009. Only Total E&P Indonesie, currently Indonesia?s biggest gas producer, can meet production commitment from its Mahakam PSC.

Lufti did not reveal Sanga-Sanga current production rate. According to a BPMIGAS official, in 2007 VICO is estimated to produce 480-525 MMCFD of gas, or equivalent to 53 cargoes of LNG.

VICO Indonesia, is jointly owned by Italian oil firm Eni SpA and Anglo-American energy firm BP Plc. (godang)