Total may pull out of Mahakam block
Wednesday, February 17 2016 - 02:42 AM WIB
Total EP Indonesie, a subsidiary of French energy giant Total SA, will probably pull out of Mahakam block after its contract expires at the end of 2017 since the terms and conditions of the new contract on the block is not interesting.
A source told Petromindo.com that the chance is 60 percent for the firm to pull out of the block as the firm considers that with the 30 percent interest offered by the government for the firm together with its Japanese partner, Inpex, and the terms and conditions of the new contract, the block will no longer economical for the French firm.
One of the terms and conditions of the new contract is revenue sharing based on ?Split Sliding Scale and Revenue over Cost (R/C), which the firm considers too small and different from the previous split. If the oil price is low, contractors will only receive 35 percent for gas and 20 percent for oil at maximum. If the oil price is high, contractors will get 25 percent for gas and 10 percent for oil at maximum, according to the source.
In the Revenue over Cost as applied in Malaysia, if the oil price is low, contractors may get up to 70 percent, according to the source.
Meanwhile, state owned oil and gas firm PT Pertamina?s Spokesperson Wianda Pusponegoro said at present Pertamina is talking about two important aspects related to the transition of operatorship in the block, namely transfer arrangement and financial terms.
?With regards transfer arrangement, (the question is,) Are there options for Pertamina to place its people as observers to study (the block prior to the expiry of the block). With regards financial terms, there will be negotiations on prices, size etc,? she said, adding that Pertamina expects to clinch deals with the existing contractors on both aspects simultaneously.
The government has allowed to award 70 percent of the block to Pertamina after the expiry of the existing contract.
Mahakam block?s new revenue split
| R/C |
Government Split (After Tax) |
Contractor Split (After Tax) |
||
| Oil | Gas | Oil | Gas | |
| 0< x ≤1 | 80.00% | 65.00% | 20.00% | 35.00% |
| 1< x ≤12 | 82.50% | 67.50% | 17.50% | 32.50% |
| 12< x ≤14 | 85.00% | 70.00% | 15.00% | 30.00% |
| 14< x ≤16 | 87.50% | 72.50% | 12.50% | 27.50% |
| x>16 | 90.00% | 75.00% | 10.00% | 25.00% |
Editing by Johannes Simbolon