Pertamina repeats intention to enter Mahakam prior to block expiry
Wednesday, August 24 2016 - 12:42 AM WIB
State owned oil and gas firm PT Pertamina (Persero) has again expressed its intention to enter the Mahakam block in East Kalimantan prior to its expiry date, calling on the government to issue a decree allowing it to do so.
Pertamina?s President Director Dwi Soetjipto said Pertamina must be allowed to enter the block this year in order to ensure the block?s production will remain stable at the time it has taken over the operatorship and ownership of the block after its expiry date on Dec. 31, 2017. Pertamina is worried that unless Pertamina is allowed to enter the block and make investment, the block?s production will sharply decline next year since Total SA, the operator of the block, will certainly reduce its investment.
?We hope the decree (the government?s decree allowing it to enter Mahakam block) can be issued within one and two months,? he said.
Dwi made the statement following a coordination meeting on Tuesday at the Office of Coordinating Minister of Maritime Affairs. The head of the office, Luhut B Pandjatian, also serves as interim Minister of Energy and Mineral Resources.
Dwi said Pertamina is ready to immediately invest US$1.8 billion in the block in order to prevent the block?s production from falling sharply in 2018 the time Pertamina will start managing the block.
?The coordinating minister (Luhut) asked us what obstacles that prevent Pertamina?s investment in the block. We need a legal umbrella (to enter the block) in order to prevent a significant production decline during operatorship transfer in 2018,? he said.
When asked about the potential production decline, Dwi said, ?I can provide details for now. If we do nothing, the decline will be sharp. If we do something, the decline will be slowed down.?
He further said Pertamina wants to get involved in the deliberation on the block?s 2017 Work Program & Budget. There are at least 19 new wells and development wells in the block that can be drilled in the second quarter of 2017.
Pertamina expects SKK MIgas to issue a special management rule (PTK) allowing Pertamina to start investing in Mahakam block. The special rule is needed because the financial report of Mahakam block will be different from usual once Pertamia starts investing there prior to the expiry date of the block?s contract. Pertamina will provide the investment, while Total will carry out the drilling ? a scheme which is not in conflict with the contract, he said.
Editing by Johannes Simbolon