Minister reiterates Pertamina allowed for 39% share down in Mahakam block

By Bonha Ventura Sebayang

Minister of Energy and Mineral Resources Ignasius Jonan reiterated on Thursday that state-owned oil and gas firm PT Pertamina is allowed to divest up to 39 percent interest in the Mahakam block to other investors including current operator Total E&P Indonesie (TEPI).

He said that a share down of 39 percent interest in the Mahakam block will still allow Pertamina to retain controlling interest of 51 percent after taking into account a 10 percent participating interest to be allocated for regional administrations in East Kalimantan where the block is located. This is in accordance with the existing regulation, he added.

Jonan, however, said that the ministry will let Pertamina decide on the 39 percent share down based on business to business negotiation with TEPI or other investors. Once Pertamina makes the decision, the ministry will issue decree on the share down.

The current contract of TEPI and partner Inpex Corp in Mahakam block will expire at the end of this year. The government has decided to transfer the operatorship of the block to Pertamina. The previous minister of energy and mineral resources Sudirman Said issued a policy allowing Pertamina to allocate up to 30 percent shares in the block to TEPI in a bid to lure the foreign firm to maintain its participation in the development of the block amid fears of Pertamina?s capacity in maintaining production of the block. But a few months ago, TEPI demanded a 39 percent interest as part of conditions for its continued participating in the development of the block, a request supported by Jonan.

Jonan said that even if Pertamina decides to maintain the 30 percent share down policy, the most important thing for the government is that the cost recovery per barrel of oil or per mmbtu of gas in the block under the operatorship of Pertamina must not exceed the cost recovery under the current operator, TEPI, and that production of the block must not decline.

Meanwhile, the ministry said in a statement that on July 16, drilling of the first well at the Tunu field and WK Mahakam, had been implemented respectively by Pertamina Hulu Mahakam and TEPI. Through September 22, TEPI had conducted drilling of six wells, while Pertamina Hulu Mahakam five wells.

Editing by Reiner Simanjuntak