Kampar becomes ?open area?, put under Medco temporarily

By Godang Sitompul

Minister of Energy and Mineral Resources Jero Wacik has decided to make the Kampar block an ?open area? and put the block under the management of PT Medco Energi Internasional on temporary basis until after the government has selected the contractor of the block.

Jero announced his decision in a letter sent to upstream authority SKK Migas on Thursday, the day the contract on the block expires. Also in the letter, Jero announced his decision to hand over the Siak block in Riau, whose contract also expires on Thursday, to state owned oil and gas firm PT Pertamina.

SKK Migas? spokesman Elan Biantoro said the government decided to make Kampar an open area since Nov. 28, 2013.

Medco will continue operating the block in coordination with SKK Migas and the Ministry of Energy and Mineral Resources until after the government has selected the new operator of the block.

?Medco has been appointed as an interim operator of Kampar working area for six months until there is a definitive operator of the block. The decision aims to ensure that production at the block will continue. The Government?s revenue will be affected if it stops producing,? Elan said.

The Kampar block was initially part of South and Central Sumatra PSC. The PSC consists of two sections, namely South Sumatra Extension and Central Sumatra Kampar.

The latter is now known as Kampar block. Medco has obtained a contract extension for the South Sumatra Extension area for another 20 years starting Nov. 27, 2013 but has been told to relinquish the Kampar area. It remains unclear why the PSC has been divided into two contracts. The South and Central Sumatra PSC was signed by PT Stanvac Indonesia on July 5, 1993 and was effective for 20 years since Nov. 28, 1993. In 1995, the PSC was bought by PT Expans Nusantara, which was later renamed into PT Medco Energi Internasional.

Commenting on the minister?s decision, Lukman Mahfoedz, Medco?s President Director said he was optimistic the government will finally select Medco to become the definitive operator of the Kampar block, given its experience in operating the block.

He said it is not easy to operate the block given the fact the oil from the block has to be transported using trucks tens of kilometers away and face security risks during the transportation. The block now produces 2000 barrels of oil per day.

He said Medco will team up with a local partner if the government decided to give the block back to Medco.

Pertamina is also interested in Kampar. The firm has sent a letter to Jero, asking the govenrment to hand over both Siak and Kampar blocks to itself once their contracts expire.

Jero however decided to only hand over Siak to Pertamina. PT Chevron Pacific Indonesia, the former operator of the block, will temporarily operate the block for another six months, until the transfer process to Pertamina has been completed.

Siak now produces around 1,800 barrels per day.

Editing by Johannes Simbolon