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CA General Services Awards Contracts to BP Amoco

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 Department.

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 soon."

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 Services Department.

Richard Nemec, Los Angeles

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