Govt extends several oil and gas contracts
Friday, November 21 2014 - 01:56 PM WIB
Minister of Energy and Mineral Resources Sudirman Said has made decisions on four oil and gas contracts, which has and will expir, showing his favor towards state owned oil and gas firm PT Pertamina.
The four blocks are Pase PSC in Aceh, Kampar PSC in central Sumatra, JOB Gebang PSC in North Sumatra and ONWJ PSC in West Java.
Sudirman said in a press statement that he decided to hand over the Pase block to the Aceh government-owned firm PDPA which has selected Australian firm Triangle Energy as partner to develop the block. Triangle and PDPA set up in July of last year a joint venture firm called Aceh Pace Global Energy Pte Ltd (APGE) to develop the block with Triangle having 75 percent shares, PDPA the remainder 25 percent.
Triangle?s contract on Pase expired in 2013 and the government temporarily extended the contract three times for six months each, that is in August 2013, February 2014 and August 2014.
With regards Kampar PSC, the minister decided to hand over the block to Pertamina with a ?transition period through Dec. 31, 2015. He said Pertamina ?should be wise in cooperating with Medco.?
The contract on the block was previously held by PT Medco Energi Internasional. Contract on the block expired on Nov. 27, 2013. The government then decided to make the Kampar block an ?open area? and put the block under the management of PT Medco EP Lirik, a subsidiary of Medco on temporary basis until the government appoints the definitive operator of the block.
The minister also decided to extend the exising contract on JOB Gebang block now held by PT Energi Mega Persada and PT Pertamina Hulu Energi (PHE) which expires in 2015. The firms have equal stakes in the block.
He also decided to extend the contract on ONWJ block which expires in 2017 ?provided that Pertamina has a bigger interest in the block?. ONWJ is now operated by PHE ONWJ, the subsidiary of PHE, with 53.25 percent interest. Its partners in the block include EMP.
Sudirman noted that at present, there were around 19 blocks, including the above-mentioned blocks, which had been waiting for government decision for many years regarding their contracts. Contracts on some of the blocks have expired and some others will see its contracts expire within two or three years.
The ministry?s head of Performance Control Unit. Widyawan Prawiraatmadja, is reviewing the contracts on the blocks in cooperation with upstream authority SKK Migas.
In making decision on the contracts, the ministry will stick to four principles. First, continuity and stability of production should be maintained in the interest of the state.
?There shouldn?t be any troubles, decrease in production (in the expiring blocks) because production and lifting should be maintained,? he said.
Second, fairness and justice towards the existing owner of the working, the operator and stakeholders. Third, simplification, certainty and transparency. Fourth, meritocracy. The government will apply a meritocracy system, in which contractors which perform will be rewarded, while those who fail will face consequence. As such, the performance of the operators which seek for contract extension will reviewed.
Editing by Johannes Simbolon