Minister to issue regulation on contract extension

The Ministry of Energy and Mineral Resources (MEMR) is drafting a ministerial regulation that will set rules for the government to decide on any request for contract extension.

?We are drafting a regulation on expiring contracts. We hope to finish it as soon as possible,? Hendra Fadly, Director of Oil and Gas Upstream Management at MEMR, said on Thursday.

Hendro expected the regulation to be completed before the contract on Siak block in Riau expires in November this year. At present, there isn?t yet any regulation focused on contract extension. The only regulation governing upstream sector is Governmental Regulation No. 35/2004 which does not specify matters related to contract extension.

Blocks whose contractors have asked for contract extension include Siak block which expires on Nov. 27, 2013. The contract on the block, which is operated by American firm PT Chevron Pacific Indonesia (CPI), was first signed in September 1963, the time CPI was called PT California Texas Indonesia. The Siak contract was first extended in 1991 until 2013. At the end of 2012, the block produced around 1,600 and 2,000 barrels per day.

Another block whose contractor has asked for contract extension is Mahakam block, which is operated by French firm Total E&P. The Mahakam contract was first signed on March 31, 1967 for 30 years. In 1997, the contract was extended for another 20 years until 2017.

Editing by Johannes Simbolon