Official: Pertamina must return EastKal, Attaka blocks

After previously announcing its decision not to take the government?s offer to takeover operatorship of the East Kalimantan (EastKal) block after the current contract of existing operator Chevron expires in October of next year, state-owned oil and gas firm PT Pertamina will also have to let go the Attaka block, according to a senior government official.

Director of Upstream Management at the Ministry of Energy and Mineral Resources, Tunggal, said on Wednesday that EastKal and Attaka blocks, both located in East Kalimantan, are ?unitization project,? which means that the blocks management and processing of the output are not separated.

The government has previously assigned Pertamina to takeover eight oil and gas blocks whose current contracts are set to expire next year. Chevron said in 2016 it would not seek for extension of its current contract. Inpex Corp and Chevron which equally owns Attaka have also said they would not continue developing the block after their contract expires.

Pertamina Upstream Director Syamsu Alam said earlier that the company has decided not to take over the EastKal block after the current contract expires due to the huge abandonment and site restoration funds that must be covered by Pertamina. The government will apply the gross split scheme in the new contract, which means that operator will no longer get reimbursement of operating and investment expenses. Pertamina also considers EastKal block to lack economic feasibility.

Tunggal said that the government has yet to officially receive Pertamina?s decision. Once the government has received the formal decision, it will immediately prepare to hold tender for the two blocks to be offered to other investors, he said. (*)