Total, Inpex demand higher interest in Mahakam block
Saturday, May 13 2017 - 06:33 AM WIB
Total E&P Indonesie (TEPI) and Inpex Corp have officially demanded for a higher interest of 39 percent in Mahakam block as part of conditions for their continuing participation in the development of the block after their current contract expires at the end of this year.
Deputy Minister of Energy and Mineral Resources Arcandra Tahar said on Friday that the ministry has received a joint letter from the two firms requesting for the 39 percent participating interest in the Mahakam block.
?We have received the letter from them a few days ago. They want a 39 percent interest,? he told reporters, adding that the requested interest will be equally split between the two companies.
The government has previously decided to transfer the Mahakam block, in East Kalimantan, to state-owned oil and gas firm PT Pertamina when the current contract of TEPI and Inpex over the block expires at the end of this year. Pertamina is allowed to partner with other investors including existing ones. Minister of Energy and Mineral Resources Ignasius Jonan has recently indicated that the government is willing to allow TEPI and Inpex to have up to 39 percent interest in the new Mahakam block contract, higher than the 30 percent limit offered by his predecessor Sudirman Said, to help entice the two foreign firms to continue their participation in the Mahakam block amid concerns of limited capacity of Pertamina that may lead to lower future production of the block.
Arcandra said that Pertamina will make valuation of the Mahakam block asset to determine the price of the 39 percent interest requested by TEPI and Inpex.
He added that in the letter, TEPI and Inpex also demanded a number of incentives including investment credit facility with new terms, faster depreciation period of two years, and assigning market price, instead of discounted price, for output from the Mahakam block to be allocated for domestic market under the so-called domestic market obligation (DMO) policy of the government.
Editing by Reiner Simanjuntak