Total disappointed over govt?s decision on Mahakam

By Godang Sitompul

Total E&P Indonesie (TEPI), the Indonesian subsidiary of French firm Total SA, is clearly disappointed over the government?s decision on Mahakam PSC in East Kalimantan as the amount of interest allocated for the firm and its current partner INPEX Corp is less than expected by the firm, according to industrial sources.

The firm expects to hold at least 35 percent interest in the block after the expiry of the current contract. However, the government has decided to give only 30 percent interest to both TEPI and INPEX, while awarding 70 percent interest to state owned oil and gas firm PT Pertamina (Persero) and the East Kalimantan government.

?The government unilaterally made the decision without negotiation (with Total). Paris (where Total is headquartered) is disappointed. They have reportedly asked the local management to prepare for pullout,? a well-informed source said.

Total feels being ignored by the government since it has never been asked to discuss the matter. As such, TEPI?s management is devising a new strategy to cope with the situation.

?Total will pull out of Indonesia. But it is up to Paris,? the source said.

When asked for comments, Minister of Energy and Mineral Resources Sudirman Said dismissed the idea that Total will pull out of Indonesia, saying Total is a big company and a big company always thinks about staying long and is used to face various ?dynamics?.

?Furthermore, the new government is exploring the best format (to solve cases like Mahakam),? Sudirman said.

Meanwhile, a source said on Tuesday that Pertamina has invited TEPI to a discussion on Mahakam on Wednesday (today).

Editing by Johannes Simbolon