Minister urges Chevron to submit proposal over Rokan block

By Thomas Sembiring

Petromindo|Lucky

Minister of Energy and Mineral Resources Ignasius Jonan said that he has asked US oil and gas firm Chevron to submit proposal to the government if it wants to extend its current contract over the Rokan block in Riau Province which is set to expire in 2021.

Jonan said that the future operation of the Rokan block was discussed with Chevron officials during his recent US trip. He said that the government will decide on whether to extend the current Rokan block contract after studying the Chevron proposal. He added that state-owned oil and gas firm PT Pertamina has also been asked to submit its own proposal if the company wants to take over the Rokan block when the current contract expires.

?If they (Chevron) wants for an extension (of its current contract), what is their proposal. The government has been proactive (in discussing the issue with Chevron). They must submit a proposal, then we?ll consider it,? he said on Tuesday.

Chevron through its subsidiary PT Chevron Pacific Indonesia (CPI) owns 100 percent of Rokan block, home to the large Duri, Minas, and Bekasap fields. Duri is one of the largest steam flood operations in the world.

Although Rokan is an aging block, production remains high at 250,000 bopd.

According to Government Regulation No 35/2004 on upstream oil and gas activities, contractors can apply for extension of their contracts at the latest two years prior to their expiry date. But the government apparently wants Chevron to make decision sooner on whether it will request for an extension of its contract over the Rokan block to allow more time for the government to make evaluation, and to help avoid production decline in the block. The government plans to apply the a gross split scheme, replacing the cost recovery mechanism, in new oil and gas contracts, which some upstream players said will discourage new investment in the country?s upstream sector as oil and gas operators will no longer get reimbursement for their operating costs in return for higher output split.

Editing by Reiner Simanjuntak