Government to offer East Kalimantan block to investors

Petromindo|Lucky

The government will immediately offer the East Kalimantan block to investors via tender after state-owned oil and gas firm PT Pertamina decided not to take over the block when the contract of current operator Chevron expires in October of next year.

?There?s no more time, we?ll hold tender soon,? Deputy Minister of Energy and Mineral Resources Arcandra Tahar said in a ministry statement on Friday.

He added that a number of investors have expressed interest in the block, but did not disclose their names.

Pertamina Upstream Director Syamsu Alam said earlier the company will not take the offer from the government for the East Kalimantan block due to the huge abandonment and site restoration funds that must be covered by Pertamina as the government will apply the gross split scheme in the new contract, replacing the previous cost recovery mechanism.

The East Kalimantan block is one of the eight blocks offered by the government to be taken over by Pertamina when the current contracts expire next year. Chevron said in 2016 it would not seek for extension of its current contract.

According to Pertamina data, production at the East Kalimantan block in 2016 stood at 36,500 boepd. The block was estimated to have 213 million of oil equivalent reserves in 2015.

Editing by Reiner Simanjuntak