SKK Migas approves bridging, funding agreements for Mahakam block

Petromindo|Dasir

Upstream authority SKK Migas has approved the bridging agreement and funding agreement signed by Total EP Indonesie (TEPI), the current operator of the Mahakam block, and PT Pertamina Hulu Mahakam (PHM), the would-be new operator after TEPI?s existing contract over the block expires at the end of this year.

Pertamina Vice President for Communications Wianda Pusponegoro said in a statement issued late Monday that the agreements strengthen the commitment of the two companies to ensure smooth transfer of the block and to maintain the block?s production once the existing contract expires.

The government has appointed state-owned oil and gas firm PT Pertamina through subsidiary PHM to take over the Mahakam block in East Kalimantan Province after the current contract of existing investors, TEPI and Inpex Corp, expires at the end of December of this year.

The statement said that the bridging agreement arranges the implementation of operating activities carried out by TEPI in 2017 for the interest of PHM. Meanwhile, the funding agreement arranges PHM?s financing mechanism for the operational activities of TEPI pursuant to the bridging agreement.

Wianda said that the final draft of the two agreements were sent to SKK Migas on February 21 of this year, and were approved by the regulatory body on March 3. The drafts have been discussed by PHM and TEPI since mid-2016. ?The transfer of operatorship of the Mahakam block to PHM will maintain production sustainability,? she said, adding that TEPI will carry out exploitation activities this year for the interest of PHM under the principle of ?no gain no loss? with funding from PHM.

Editing by Reiner Simanjuntak