Pertamina cuts down drilling plan in Mahakam block

By Febry Silaban

Petromindo

State-owned oil and gas firm PT Pertamina is unlikely to be able to realize its initial plan to drill 19 wells this year at the Mahakam block in East Kalimantan Province due to a number of factors including tax issue.

This was said by Pertamina Upstream Director Syamsu Alam to Petromindo.com on Wednesday. He said that the company may only be able to drill around eight wells this year in Mahakam.

?Probably, it will not be 19 wells this year. We?ll optimize it (the drilling program) in 2018 and the following years,? Syamsu said, adding that the company plans to start the drilling program in May or June.

He said that among of the factors forcing the company to revise the drilling plan for this year in Mahakam block include regulatory and tax issues affecting the economic feasibility of the drilling program. He did not provide further details.

Chairman of Upstream authority SKK Migas Amien Sunaryadi said earlier that the Ministry of Finance is considering to impose value added tax (VAT) on the drilling program by Pertamina in the Mahakam block this year, thus affecting the economic feasibility of the project.

Pertamina through subsidiary PT Pertamina Hulu Mahakam will take over the Mahakam block from current investors PT Total EP Indonesie (TEPI) and Inpex Corp early next year once the current contract expires at the end of this year. TEPI, current operator of the block, has agreed to allow Pertamina to start making investment in the block this year to help maintain output level, under which TEPI will drill six wells and Pertamina 19 wells this year.

Head of Well Maintenance and Drilling Operation Division at SKK Migas Ngatijan said earlier that TEPI has completed drilling of the six wells.

Mahakam block?s average production currently stands at 1,635 mmscfd of gas and 63,000 bpd of oil.

Editing by Reiner Simanjuntak