Ministry to hold tender for Attaka, EastKal blocks early 2018
Thursday, November 23 2017 - 02:21 AM WIB
The Ministry of Energy and Mineral Resources plans to offer to investors the Attaka and East Kalimantan (EastKal) blocks via tender early next year.
Director General of Oil and Gas at the ministry, Ego Syahrial said on Wednesday that the existing contractor of the two blocks, Chevron, has decided not to continue operating the blocks after its contracts expire.
He added that state-owned oil and gas firm PT Pertamina, which has been previously assigned to take over the operatorship of eight blocks whose contracts are set to expire between 2017 and 2018, has also turned down the offer.
?We?re preparing the terms and condition and the bid documents, and (the two blocks) will be offered through open tender in early next year,? Ego said, adding that many investors have expressed interest in the two blocks, which are both located in East Kalimantan.
Chevron?s contract over the Attaka block expired in March 2017, while the contract for the EastKal block will expire in October of next year. Chevron has decided not to extend the contracts. Meanwhile, Pertamina won?t take over the two blocks among others due to the huge abandonment site restoration funds the company must shouldered, thus making the projects to be less economically feasible.
The government earlier this year assigned Pertamina to take over eight oil and gas blocks including Attaka and EastKal after the current contracts expire. The other six blocks are Tuban block in East Java, operated by JOB Pertamina-PetroChina East Java, whose current contract is set to expire in February 2018; Ogan Komering block in South Sumatra, operated by JOB Pertamina-Talisman, whose contract is set to expire in February 2018; NSO block in Aceh, operated by Pertamina, whose current contract will expire in October 2018; Tengah block in East Kalimantan, operated by Total E&P Indonesie, whose contract will expire in October 2018; Sanga-Sanga block in East Kalimantan operated by VICO, whose contract is set to expire in August 2018; and Southeast Sumatra block in Lampung operated by CNOOC SES Ltd, whose contract will expire in 2018.
The government has said it will integrate the operation of NSO block with the nearby NSB block operated by Pertamina, while the Tengah block to be integrated with Mahakam block, which will be taken over by Pertamina early next year, to help ensure efficiency.
Pertamina has said it is interested to takeover the operatorship of the other four blocks incluing Tuban, Ogan Komering, Sanga-Sanga, and Southeast Sumatra.
But Ego said that although the government has assigned the four blocks to Pertamina, the state company must meet two top criteria including ensuring that production will not decline and cost per barrel must not increase. ?First of all, production must not decline, and secondly, the cost per barrel must not increase,? he said.
He said that existing operators will be given opportunity to come up with a better proposal to the government if they?re still interested in continuing to operate the blocks. Nevertheless, the government will give priority to Pertamina, which is also allowed to team up with the existing investors, he added.
Editing by Reiner Simanjuntak