Govt may hand over Mahakam block to Pertamina

The government will unlikely extend the production sharing contract for Mahakam oil and gas block which is currently operated by Total E&P Indonesie, when the current contract ends in 2017, Investor Daily reported.

Energy and Mineral Resources Deputy Minister Widjajono Partowidagdo said in Jakarta last week that the Mahakam should be operated by local companies, state or private firms, when the current concession contract ends in March 2017.

He said that the operation of the Mahakam block could adopt the cooperation model in the operation of the East Natuna block. ?If such a model is used, current operator could take part in its future operation,? he added.

According to him, the government will most probably name state owned oil company Pertamina to operate the Mahakam block, after the contract is terminated. Pertamina could then invite partners to operate the block, he said.

?The decision on the operation of the Mahakam oil block can be made this year so that Pertamina can cooperate with current operator until the operation is formally shifted after 2017,? he said. Although Pertamina can cooperate with other firms in the operation of the oil block, it should be the majority shareholder, he added.

Pertamina is currently still in negotiations with Total to enter in the oil block before the end of the contract in 2017. Pertamina spokesman Mochamad Harun said Total had shown a positive response to Pertamina?s interest to own part of interest in the block before the contract ends.

The Mahakam block, which is currently developed by Total and Inpex Corp, each with 50 percent interest has been producing for over 50 years with most of its production exported to Japan. The first 30-year contract was first signed in 1967 and then extended for another 30 years in March 1997, which is to expire in March 2017. (*)

Editing by Roffie Kurniawan