Pertamina told to revise Mahakam proposal

The Ministry of Energy and Mineral Resources has asked state-owned oil and gas firm PT Pertamina to revise its proposal for Mahakam block development in light of the current oil price drop.

Director General of Oil and Gas IGN Wiratmadja said on Wednesday that in the proposal, submitted by Pertamina to the government in February of this year, the company plans to invest a total of US$25.2 billion for 20 years, with exchange rate assumption of Rp 12,500 per US dollar, and oil price assumption $100 per dollar. Oil price has now dropped to around $50 per dollar.

?We want Pertamina to sharpen its analysis by expanding the simulation,? Wiratmadja said, adding that this does not mean the government rejects the company?s proposal.

He added that the revised proposal is expected to be completed in April.

Pertamina is seeking to take over the gas-rich Mahakam block in East Kalimantan once the existing contract held by Total E&P Indonesie and Inpex Corp expires in 2017.

As earlier reported by this portal, Pertamina claims in the proposal that it was ready to take over 100 percent of the block after 2017. The government was initially expected to make a decision regarding Pertamina?s request this month.

Total has previously proposed a transition period, under which the company would continue to operate the block for five years after the expiry of the current contract to help ensure a smooth transfer to Pertamina so that production would not be disrupted. (*)