Minister approves Mahakam block contract amendment

Minister of Energy and Mineral Resources Ignasius Jonan has approved the amendment of the Mahakam block production sharing contract in a bid to maintain the block?s oil and gas production when it is transferred to state-owned oil and gas firm PT Pertamina in 2018 from the current operator Total E&P Indonesie.

Ignasius said in a statement on Tuesday that the amendment of the contract, signed by Pertamina and SKK Migas in December of last year and to be effective January 1, 2018, is required to help ensure investment at the Mahakam block during the transition period next year from the current operator to Pertamina.

?The amendment must be made as a basis for implementing activities and provide legal certainty during the transition period of the Mahakam working area. In addition, the amendment is also to help ensure oil and gas production,? he said in the statement.

The statement said that the amendment among others will pave the way for Pertamina to start making investment before January 2018 in Mahakam block, the expenses of which will be reimbursed by the government through cost recovery mechanism after the company becomes effective operator of the block. ?With the amendment, Pertamina can make investment earlier and production at Mahakam block will be maintained,? Ignasius said.

The statement said that Pertamina plans to invest US$180 million for the drilling of 19 wells before 2018 so that gas production at Mahakam block can be maintained at 1.2 bscfd, and condensate at around 20,000 bcpd in 2018-2019.

Editing by Reiner Simanjuntak