Govt gives ?block basis? incentive to PHE for West Madura block

By Bernard Loebs

The government has granted the request of PT Pertamina Hulu Energi (PHE), a subsidiary of state owned oil and gas firm PT Pertamina, for an application of block basis scheme in its West Madura Offshore block in West Java province as part of an incentive for the firm.

Block basis scheme allows contractors to use revenue from producing fields of a certain block to cover the exploration costs of other fields of the same block. At present, such practice is disallowed. Under the current system, which is known as Production of Development (PoD) basis, contractors must share output or revenue from producing field covered by the PoD with the government and is barred from using the revenue to finance the explorations in other fields of the same block which are not covered by the PoD

Besides, PHE?s President Director Gunung Sardjono, the firm has also requested that a similar scheme be applied in its Offshore Northwest Java (ONWJ) block. The government is putting the request into consideration, he said.

PHE has also asked for extension of exploration period for its coal bed methane (CBM) blocks. There are 14 CBM blocks where the firm has stake, all are still in exploration stage. The firm ask the exploration period to be extended by five years for each of the block, Gunung said.

In response, the government has said it would only extend the exploration period of blocks where the firm has fulfilled at least 60 percent of its exploration commitment.

?Thus, this request is still under review by the government,? he said.

Editing by Johannes Simbolon