Pertamina gets backing to operate Mahakam block

The government says it will fully support state oil and gas company PT Pertamina in operating the country?s largest gas production site, the Mahakam block in East Kalimantan, when the contract of the site?s current operator, French energy giant Total, expires in 2017, The Jakarta Post reported.

The Energy and Mineral Resources Deputy Minister Widjajono Partowidagdo said that ideally there would be a clear decision on the future of the block at least 10 years before the contract expired.

He said he had recently met Pertamina president director Karen Agustiawan and upstream director Muhammad Husein to discuss the possibility of the company operating the block as well as gradually acquiring a stake in the block starting this year.

?I have also talked to [Total E&P Indonesie president director] Elisabeth Proust. I said Pertamina had to be the operator when the contract ended, and that now it?s better to allow Pertamina to buy the stake so the investment costs can be shared,? Widjajono said.

Pertamina has earlier said that it is interested to acquire working interest in the block in stages, starting with 15 percent this year ramping up to 45 percent before the block?s contract expires. Pertamina has been reportedly in talks with the block?s operator Total E&P Indonesie over the planned farm-in.

The Mahakam block is currently Indonesia?s largest gas producer with production of around 2.4 BCFD, supplying gas to Bontang LNG plant.

Indonesian unit of French giant Total SA has 50 percent stake in the block with the balance held by Japan?s Inpex Corp. (*)