Govt encourages Pertamina to enter Mahakam block

The government has encouraged state oil and gas company PT Pertamina to acquire a stake in the Mahakam block, offshore East Kalimantan before production sharing contract (PSC) on the block expires in 2017.

French giant firm Total E&P Indonesie is the operator of the block with a 50 percent interest and Japan's Inpex holds another 50 percent.

"We want Pertamina to have joined Mahakam before the contract expires," Energy Minister Darwin Zahedy Saleh said on Wednesday.

When expires, the block will have to be returned to the government and cannot be extended automatically. If Total intends to extend its contract, the government will consider it under a new principle that benefits Indonesia.

?One of the considerations is that Total has contributed a lot. Its production exceeds the target. But we want Pertamina?s interest to expand if the extension is approved,? Saleh said.

Pertamina has been negotiating with Total to become a partner in the block. The state company initially aimed a 17 percent interest and a majority stakes after 2017. (*)