BPMIGAS to Pertamina: ?Please take over Mahakam operatorship?

By Godang Sitompul

Upstream authority BPMIGAS said on Wednesday it would support the intention of state owned oil and gas firm PT Pertamina to take over the operatorship of Mahakam block in East Kalimantan from Total E&P Indonesia (TEPI), the subsidiary of French energy giant Total S.A.

?BPMIGAS has agreed that Pertamina may take over the block. The question is how to carry out the takeover before 2017. (The challenge for) Pertamina and Total is how to convince the public that the takeover process would be smooth,? BPMIGAS? Chairman R. Priyono told reporters on the sidelines of the 25th World Gas Conference in Kuala Lumpur.

Contract held by TEPI on the block expires in 2017. TEPI and its Japanese partner Inpex Corp have been seeking an extension of their contract on the block but various governmental officials have signaled the government might allow Pertamina to take over the operatorship. It remains unclear if in such scenario, Pertamina will become the majority owner of the block with TEPI and Inpex as minority partners. Now, the block is equally owned by the French and Japanese firms.

Mahakam, one of the most prolific gas fields in the country, is the biggest supplier of natural gas to the Badak LNG plant in Bontang. If the takeover process does not run smoothly, experts fear the field?s production will significantly drop, causing a big impact on the Badak LNG plant?s performance.

To prevent such a possibility, BPMIGAS has recommended the operatorship takeover be carried out gradually.

?Based on our latest talks, the operatorship transition will start in 2017. Total will still handle the operatorship in the following years (before handing it over to Pertamina). There isn't yet any talk how long (TEPI will still handle the operatorship),? he said.

Editing by Johannes Simbolon