CA General Services Awards Contracts to BP Amoco
BP Amoco for a third time in five years has won the annual
bidding for California's natural gas purchasing program. supplying
about 120 facilities operated by the California General Services
BP Amoco won contracts for both the northern (Pacific Gas &
Electric) and southern (Southern California Gas) state facilities.
Sempra Energy Trading will remain the current supplier of both
contracts until the end of this month.
"We're very pleased," Marshall Clark, the state's gas buying
director, said last week in announcing the contract award. Clark
said he received four bids to supply gas in the north and three in
the south from among a list of state-qualified bidders. "BP Amoco
over the past four years had contracts with us twice, so they are a
familiar supplier. They have been very good in the past, and we're
looking forward to the new deal."
Due to market uncertainties, the bidding last month was delayed
until June 7, and as a result the contracts are for nine months
rather than the usual 12-month period. So the usual total of about
14 Bcf in volumes has been lowered to about 8.5 Bcf for the shorter
contracts (July 1 through March 31, 2001), Clark said.
"We're hoping to see a gas market that is a lot friendlier in
April," Clark said. "Nobody seems to know what is going to happen.
For the last three days, the market has looked like hopefully we
have seen the top and we're finding a new plateau. It is going to
be higher, but hopefully we don't go into $5/mcf country any time
California state facilities, including hospitals, prisons,
universities and major office complexes, are expecting fuel bill
increases in the range of 50% to 70% for their next fiscal year,
2000-01, Clark said. The normal "saddle" for annual gas buying
provided in May and June --- after the winter heating load and
before heavy summer air conditioning demands --- has disappeared
this year with gas prices climbing steadily this spring.
"We've come to the conclusion that the May-June period when we
have traditionally bought our gas is not the best time for us
anymore," said Clark. California sought bids for indexed supply
deals with none of the floors and ceilings that have become common
in its annual fuel contracts. Clark would not discuss the specific
terms of the contract, but he said it is a standard state contract
that is posted on the California web site under the General
Richard Nemec, Los Angeles
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