Jokowi rejects East Kalimantan?s demand for 19% interest in Mahakam

President Joko Widodo (Jokowi) has rejected the demand of the East Kalimantan provincial government for a high interest in Mahakam block, saying the amount of interest to be delivered to the province must be in line with the existing regulation.

The province has asked for 19 percent interest in the block. However, the Minister of Energy and Mineral Resources Regulation No. 15/2015 states that the regional state owned firms (BUMD) may only receive a 10 percent Participating Interest in expiring blocks.

He said the results of Mahakam should be enjoyed by all people in the country and state owned oil and gas firm PT Pertamina should receive the maximum benefits from the block.

Jokowi made the statement during a limited Cabinet meeting on Mahakam on Friday.

During the meeting, Jokowi also instructed Minister of Energy and Mineral Resources Sudirman Said to complete the drafting of a new Production Sharing Contract (PSC) for the Mahakam block in East Kalimantan by the end of this year.

He also instructed the minister to soon start the process of operatorship transition at the block, noting that the transition should be carried out well in order to prevent technical troubles in the future. Communications with all concerned parties should be maintained in order to prevent miscommunication.

The minister should also start the process of asset valuation and explain to the public that the measure that has been taken by the government is aimed at realizing the nation?s energy independence.

Editing by Johannes Simbolon