Government rejects incentives requested by Total

Petromindo|Lucky

The Ministry of Energy and Mineral Resources has turned down a number of incentives requested by Total E&P Indonesie as part of conditions for its continued participation in the development of the Mahakam block after its current contract expires at the end of this year, Bisnis Indonesia reported on Wednesday.

The paper quoted Deputy Minister of Energy and Mineral Resources Arcandra Tahar as saying that the company has proposed for incentives including zero percent first tranche petroleum, investment credit facility, and depreciation period of two years.

?The three demands (of Total) have been rejected by the government. We have informed this (to the company), and they accepted it,? he told the paper.

He, however, added that the company is still interested to continue to have interest in the Mahakam block, in East Kalimantan, and has been asked to hold business-business negotiation with state-owned oil and gas firm PT Pertamina.

Total currently holds a 50 percent operating interest in Mahakam block, while partner Inpex Corp holds the remaining half.

The government has decided to hand over the Mahakam block to Pertamina after the current contract of Total and Inpex expires at the end of this year. But the government is also hopeful for the two foreign firms to continue participation in the development of the block under a new contract with Pertamina as operator.

Total and Inpex have demanded a 39 percent interest in the block as part of conditions for their continued participation, but Pertamina has insisted that it would only be willing to allocate up to 30 percent shares.

Jonan indicated in June for the possibility of Total and Inpex obtaining up to 39 percent interest in the Mahakam block. (*)