Govt demands better terms on the extension of Mahakam PSC

Government is demanding oil giant Total E&P Indonesie provides a more favorable production split should it want the extension a contract to drill for gas in the Mahakam PSC in East Kalimantan.

 

The current contract ends in 2017, and if Total wants to seek an extension, as it has said it does several times, the government would ask for a greater portion, said Energy and Mineral Resources Purnomo Yusgiantoro on Tuesday.

 

“We just want better terms to result from the negotiation to extend the contract,” Purnomo said as quoted by Jakarta Post. In addition to a better split, the government wants also the operators to give some of its stake in the block to the local government and state-owned oil and gas PT Pertamina, Purnomo said

 

The government is considering formulating a regulation that will allow Pertamina to buy as much 15 percent in a new drilling contract, or in contract extension.

 

When contacted, Ananda Idris, Total’s corporate communications manager, refused to comment, saying that the discussion was still underway.

 

Last month, Total E&P Indonesie President and General Manager Phillipe Armand said that Total has no plan to divest interests in the Mahakam PSC and no obligation to do so under the existing contract, apparently commenting on reports that Pertamina is seeking to 10 percent interest in the PSC.

 

Armand told reporters that Total is seeking an extension of 10-15 years for its contract on Mahakam PSC.

 

Mahakam PSC, where Total and Japanese firm Inpex have equal interest, is currently Indonesia’ top gas producer, supplying 75 percent of Bontang LNG’s gas requirement. The block is producing at plateau rate of 2.6BCFD and 90,000 BPD of liquids (*)