Government opens possibility for Total to maintain operatorship of Mahakam block

By Febry Silaban

Courtesy of SKK Migas

Minister of Energy and Mineral Resources Ignasius Jonan said that there is possibility for Total EP Indonesie (TEPI) to maintain operatorship of Mahakam block after its current contract over the block expires at the end of this year, possibly through joint operation with state-owned oil and gas firm PT Pertamina.

Ignasius said that allowing Total to retain its operatorship status in the Mahakam block forms part of efforts to help maintain production of the block, which accounts for up to 20 percent of the country?s total gas output.

He said that Total should talk this over with Pertamina, which will take over the Mahakam block, in East Kalimantan Province, starting 2018 after the expiry of the current contract of existing investors including TEPI and Inpex Corp.

Jonan added that TEPI and Inpex may have higher interest of up to 39 percent in the block under a new production sharing contract. The government previously offered the two companies maximum 30 percent stake in Mahakam block, with Pertamina through subsidiary PT Pertamina Hulu Mahakam controlling the remaining 70 percent stake.

?Pertamina will increase its share down to a maximum of 39 percent, but will still control majority of 51 percent, while the other 10 percent to be given to regional governments,? Ignasius said over the weekend on the sidelines of a visit to the Mahakam block.

He reiterated that production rate at Mahakam block must be maintained although the fields are already aging.

Regarding the government?s new offer, TEPI President and General Manager Arividya Noviyanto said that the company would discuss it over with its parent, French firm Total. ?We?ll discuss it over with our head office. In not too distant future, we?ll deliver the result of the assessment,? he said, adding that the new offer including a possible joint operation in Mahakam would also depend on the response of Pertamina.

Meanwhile, Vice President for Corporate Communications at Pertamina, Wianda Pusponegoro said that Pertamina is open to a share down maximum of only 30 percent. ?For the share down in the context of b-to-b, we?re open to not more than 30 percent,? she said.

She also reiterated that after end of 2017, Pertamina will become the operator of the Mahakam block. ?The operatorship (of Mahakam) is already clear, to be held by Pertamina,? she said, adding that her company is open to new partners in Mahakam block, but ?not related to operatorship.?

Average production at Mahakam block, which started production in 1974, currently stands at 1,635 mmscfd of gas, and 63,000 bpd of oil. TEPI and Inpex, which equally have 50 percent interest in the block started investment in 1966.

Editing by Reiner Simanjuntak