SKK Migas initiates contract mirroring in Mahakam block

Petromindo|Khalsa

Upstream authority SKK Migas has initiated the process to implement contract mirroring in Mahakam block, under which over 500 contracts valued around US$1.5 billion on the procurement of goods and services awarded by current block operator Total E&P Indonesie to various vendors will be transferred to upcoming new operator PT Pertamina Hulu Mahakam.

SKK Migas said in a statement obtained on Tuesday that the contract mirroring policy is expected to help maintain production at the Mahakam block, in East Kalimantan Province, during the transition period of the operatorship of the block, which contributes about 22 percent to the country?s gas output.

?This policy is taken to ensure sustainable cumulative production of 18.7 TCF of natural gas, and oil and condensate of 1.46 GBBLs in Mahakam block,? said SKK Migas Deputy for Procurement Control, Djoko Siswanto in the statement.

Total?s current contract over the Mahakam block will expire at the end of this year. The government has decided to transfer operatorship of the block to Pertamina Hulu Mahakam, an indirect subsidiary of state-owned oil and gas firm PT Pertamina, starting next year.

SKK Migas said that the contract mirroring will be started in January of 2018 valid for one year. The contract mirroring was initiated with the transfer of SKK Migas decree on the approval of the contract mirroring mechanism to Total.

Among of the contracts vital to the operation of the Mahakam block are manpower contracts affecting some 2,000 workers, and contracts on rigs, vessels, and other supporting facilities.

Editing by Reiner Simanjuntak