Government to revise regulation on expiring oil, gas contract

The Minister of Energy and Mineral Resources plans to revise Ministerial Regulation No 15/2015 on the Development of Expiring Oil and Gas Working Areas to among others help ensure a smooth transition of the operatorship of the Mahakam block in East Kalimantan, Investor Daily reported on Tuesday.

The paper quoted Director General of Oil and Gas at the ministry IGN Wiratmaja Puja as saying that the revision of the ministerial regulation is part of legal umbrella prepared by the government to facilitate the intention of state-owned oil and gas firm PT Pertamina to start making investment in the Mahakam block next year during the transition period from the block?s existing operator Total SA, whose contract is set to expire at the end of 2017. ?It will be reaffirmed that (Pertamina) can start making investment before taking over (the Mahakam block), but it (the investment activities) will be implemented by the existing operator,? he said, but did not provide further details about the planned revision.

The government has assigned PT Pertamina to take over the gas-rich Mahakam block when the current contract of Total expires at the end of 2017. Pertamina has repeatedly appealed to be allowed to start making investment next year to ensure stable gas production when it starts taking over the block in 2018. Pertamina is worried that unless Pertamina is allowed to enter the block and make investment, the block?s production will sharply decline next year since the existing operator will certainly reduce its investment.

Pertamina has also said it was ready to invest up to US$1.8 billion in Mahakam block next year. (*)