Senior official rejects Total?s request for higher Mahakam block interest
Friday, July 21 2017 - 01:49 AM WIB
The paper quoted a source as saying that the directorate general (Dirjen Migas) has sent a letter to Minister of Energy and Mineral Resources Ignasius Jonan regarding the decision. ?Dirjen Migas rejected the (Total?s request). The letter (on the decision) has been sent to Minister Ignasius Jonan. I don?t know whether the minister rejects (the request) or accepts it,? the source said.
Total is the operator of the Mahakam block in East Kalimantan in partnership with Inpex Corp. Their contract over the block will expire at the end of this year, and the government has decided to transfer the operatorship of the block to state-owned oil and gas firm PT Pertamina. But the government has also asked Total and Inpex to continue participating in the development of the Mahakam block amid concerns over Pertamina?s capacity. Then minister Sudirman Said offered Total and Inpex a combined 30 percent participating interest under a new contract with Pertamina as operator.
But Minister Jonan a few months ago indicated that there?s possibility for Total and Inpex to have up to 39 percent interest, instead of only 30 percent, in the new Mahakam block contract. In May, Total and Inpex officially made the request for the higher stake in Mahakam block in a letter sent to the ministry as part of their conditions to continue participate in the future development of Mahakam. But Pertamina has opposed plan to give Total and Inpex greater interest in Mahakam block.
The two firms also demanded incentives such as zero percent first trance petroleum, instead of the usual 10 percent, investment credit of 17 percent, and shortening depreciation period to two years, instead of five years.
Deputy Minister of Energy and Mineral Resources Arcandra Tahar said that regarding the requested incentives, he had signed the response letter. He did not specifically said whether the requested incentives have been approved or not. Regarding the request for higher interest in Mahakam block, he said that the decision will be made by Minister Jonan.
Director General of Oil and Gas IGN Wiratmaja Puja did not provide clear response when asked to confirm whether has turned down the Total request. ?The authority lies with the minister. The letter (of Total) will soon be responded,? he said. (*)