Govt decides service contract, rather than PSC, for Kampar block
Thursday, February 27 2014 - 07:19 AM WIB
The government has decided to apply a Service Contract system rather than a Production Sharing Contract (PSC) system on the Kampar block onshore Riau, after the PSC on the block held by PT Medco Energi International expired at the end of November of last year, according to an industrial source.
Upstream authority SKK Migas refused to confirm or deny the information.
?The authority to decide on the type of contract lies with the Ministry of Energy and Mineral Resources. Please ask the Directorate General of Oil and Gas,? Widhyawan Prawiraatmadja, Deputy of Commercial Control at upstream authority SKK Migas, said
No officials at the Directorate General of Oil and Gas was however available for confirmation
When asked for confirmation, Medco?s President Director Loekman Mahfoedz said: ?That?s (the service contract) what the Directorate General of Oil and Gas has proposed. It?s not us who has made a choice.?
In November last year, Minister of Energy and Mineral Resources Jero Wacik decided to make the Kampar block an ?open area? and put the block under the management of PT Medco Energi Internasional on temporary basis, initially for six months, until after the government has selected the contractor of the block.
The Kampar block was initially part of South and Central Sumatra PSC. The PSC consists of two sections, namely South Sumatra Extension and Central Sumatra Kampar.
The latter is now known as Kampar block. Medco has obtained a contract extension for the South Sumatra Extension area for another 20 years starting Nov. 27, 2013 but has been told to relinquish the Kampar area. It remains unclear why the PSC has been divided into two contracts. The South and Central Sumatra PSC was signed by PT Stanvac Indonesia on July 5, 1993 and was effective for 20 years since Nov. 28, 1993. In 1995, the PSC was bought by PT Expans Nusantara, which was later renamed into PT Medco Energi Internasional.
The block now produces around 2000 barrels per day of oil
Editing by Johannes Simbolon