Pertamina to start investment in Mahakam block next year
Thursday, September 8 2016 - 07:31 AM WIB
State-owned oil and gas firm PT Pertamina has finally been allowed to start making investment at the Mahakam block, East Kalimantan, next year although the contract of the current operator, Total E&P Indonesie will only expire at the end of the year.
Interim Minister of Energy and Mineral Resources Luhut Panjaitan said on Thursday that Pertamina and TEPI will drill a total of 25 wells in 2017, of which 19 to be drilled by the state firm and the remainder by TEPI.
?The legal issue between Total and Pertamina has been settled. Funding (issue) has been settled. The production split has been settled, 70:30, all have been settled,? Luhut without providing further details.
Pertamina over the past few months has been campaigning for it to be allowed to start making investment in the Mahakam block prior to the expiry of TEPI?s contract in the block, to help avoid production decline at Mahakam when it assumes operatorship in 2018. Pertamina feared that TEPI would scale down investment at the block as its contract is set to expire at the end of 2017. Pertamina said it is ready to allocate US$1.8 billion worth of investment in Mahakam block. According to the current contract, Pertamina can only enter Mahakam in 2018.
The government has decided not to renew the current Mahakam block contract, held by TEPI and Inpex Corp, handing it over to Pertamina as operator. TEPI and Inpex have been given opportunity to have minority stake in the block after 2017, but the two have yet to respond to the offer.
Gas production at Mahakam block currently stands at 1.74 bcfd, while condensate at 68,000 bpd. The block has 8,500 wells.
Editing by Reiner Simanjuntak