Minister given one month to settle Mahakam PSC, Freeport contracts
Tuesday, March 17 2015 - 04:57 AM WIB
Minister of Energy and Mineral Resources Sudirman Said said that President Joko Widodo has given him one month to settle the issues around the Mahakam block and PT Freeport Indonesian contracts.
?I have been given one month time from now,? Sudirman told reporters late Tuesday.
Sudirman said that decision must be taken quickly as it affects the fate of planned multi-billion dollar investments at Mahakam and PT Freeport mine.
The Mahakam block in East Kalimantan is currently operated by Total E&P Indonesie, the local subsidiary of French Total SA with a 50 percent interest, while the balance is held by Japan?s Inpex Corp. The contract over the block is set to expire in 2017.
Total has said it plans to invest up to US$25 billion in the block, but demands certainty over its request for contract extension before making the fresh investment.
But state-owned oil and gas firm PT Pertamina has demanded the government not to extend the Total?s contract once it expires, and hand over the block to the company.
Officials have suggested another scenario of allowing Total and Pertamina to co-operate the block, with a company owned by East Kalimantan government to have a 10 percent interest in the block.
Meanwhile, gold and copper giant PT Freeport Indonesia has said it plans to spend $17 billion over the next several years to develop an underground mine in Papua and a copper cathode smelter in East Java. The company, however, has requested for an extension of its contract, which is set to expire in 2021, before disbursing the investment.
Under the existing regulation, the foreign company is only allowed to seek for an extension of the contract two years before its expiry. The contract extension has been the main stumbling block for the amendment of PT Freeport?s mining contract as mandated by the 2009 Mining Law.
Editing by Reiner Simanjuntak