Ministry still formulating regulation on contract extension

The Ministry of Energy and Mineral Resources is still formulating the regulation on the guideline and requirements for production sharing contract(PSC)wishing to extend their contracts.

One of the key issues remain under discussion is how to allow state owned oil and gas firm PT Pertamina to participate in the blocks that get contract extensions, according the ministry website.

According to the website, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Monday in a hearing with the House of Representatives that there were several options for Pertamina to participate in the blocks that get contract extensions.

First, Pertamina propose the blocks it want to participate in. Secondly, the government chooses the blocks and directly negotiate on terms and conditions with the existing block owners.

He explained many contractors proposed PSC extension long before the contract ends, for long-term investment planning reason. For instance, French firm Total Indonesie and equal partner Japan's Inpex have proposed an extension of their contract on Mahakam block, which expires in 2017.

Aside from the Mahakam block, there are currently five other blocks/fields whose contractors have asked for contract extensions. They include the SSE field, which is part of the South and Central Sumatra PSC, wholly owned by PT Medco E&P Sumatra; Block A, which is owned by the consortium of Medco, Premier Oil and Japex; Madura PSC, which is wholly owned by Husky Oil. (bernrad)