Government may cancel decision to transfer eight blocks to Pertamina
Thursday, June 8 2017 - 08:27 AM WIB
The government may cancel its earlier decision to transfer eight oil and gas blocks whose contracts are set to expire between 2017 and 2018 to state-owned oil and gas firms PT Pertamina if the latter proves unable to maintain healthy production level at Mahakam block next year.
This was said by Djoko Siswanto, Deputy for Procurement Control at upstream oil and gas authority SKK Migas on Thursday. The Mahakam block, in East Kalimantan Province, will be transferred to Pertamina once the existing contract of Total over the block expires at the end of this year.
The government has also decided to transfer eight other blocks whose current contracts will expire between now and next year to Pertamina. The eight blocks include Sanga-sanga, South East Sumatera, Tengah, East Kalimantan, Attaka, North Sumatera Offshore (NSO), Tuban and Ogan Komering.
Djoko cited as an example that if production at the Mahakam block drops significantly next year, the government will cancel an earlier plan to transfer to Pertamina the operatorship of the Sanga-sanga block, where the contract of the block?s current operator, VICO, will expire in August of 2018. He said that while most existing operators of the aforementioned blocks have expressed interest to continue participate in the development of the blocks, Vico has yet to make decision whether it would continue participate in the Sanga-sanga block with Pertamina as operator.
Pertamina has been allowed to make early investment in the Mahakam block starting this year to help avoid significant decline in production when it takes over the operatorship of the block next year. The government has also offered Total and partner Inpex up to 39 participating percent interest in the Mahakam block under a new contract where Pertamina is the operator. The offer is made so that the two foreign firms will continue investment in the block to avoid production decline given the limited capacity of Pertamina.
Editing by Reiner Simanjuntak