BPMIGAS to recommend contract extension for good operators

By Godang Sitompul

A new deputy of upstream authority BPMIGAS said on Monday the agency would recommend the government extend the existing production sharing contracts (PSC) once they expire provided that the contractors have a good performance.

Widhiyawan Prawiraatmadja, who was installed as Deputy of Planning at BPMIGAS last month, said part of BPMIGAS?s tasks is maintaining production. The agency will thus recommend the extension of a contract if such a measure is considered necessary to maintain production.

?Basically, a contract has expired once its contractual period has come to an end. However, in case a block still has reserves left, it is in the interest of the government that there?ll still be an operator to ensure continuity of production technically and economically.

?One of the criteria (for the selection of the operator) is continuity of production. If the old operator performed well in terms of production, (the option of extending its contract) is worth considering,? he said.

He noted however in extending the contracts, the government also needs to accommodate the aspirations of national companies, including state owned oil and gas firm PT Pertamina, firms owned by regional governments (BUMD) and national private firms.

?This combination should be put into consideration. The (right to make) final decision lies with the Ministry of Energy and Mineral Resources,? he said.

He did not specify contracts that BPMIGAS may recommend for extension. But, according to the agency?s data, there are 29 blocks whose contracts expire from 2013 through 2021, including the giant Mahakam block in East Kalimantan operated by Total EP Indonesie.

Editing by Johannes Simbolon