Govt to decide on the gas-rich Block A contract extension

The government expects to make decision on a contract extension of the gas-rich Block A in East Aceh this month.

"The matter is being discussed by the directorate general of oil and gas and the decision is expected to be made this month," upstream oil and gas regulator BPMigas' deputy of operations Budi Indianto told lawmakers at a hearing with the House of Representatives Commission VII on energy and mineral resources.

Block A contains an estimated 120 million standard cubic feet of gas per day (MMSCFD) with Medco E&P Indonesia holding a 41.67 percent participating interest in the block. Medco partners with Premier Oil Sumatera (North) BV and Japex Block A Ltd, which have participating interests of 41.67 percent and 16.67 percent respectively.

The contract is to expire by 2011, but the government has said several times that the contract will be extended as the gas from the block will be important for local industry and power plants.

Budi said the block would start production in 36 months after the contract was extended. As much as 15 million MMSCFD from the block will be used to fire a power plant operated by state power firm PLN in East Aceh.