Total optimistic to get govt's approval for Mahakam extension

French oil giant Total SA said on Monday it was hoping to get an approval from the government for its proposal to extend the Mahakam PSC block contract within the next two years to enable it and its partner to optimize production from the field.

?Total and Mahakam PSC partner Inpex Corporation are confident that the contract would be extended by the government as the block?s contract has been extended once for 10 years by the government,? Total E&P Indonesie President and General Manager Phillipe Armand told reporters.

Armand told reporters that Total is seeking an extension of 10-15 years for its contract on Mahakam block PSC, which is to expire in 2017.

?Total is currently producing at around 2.65 BCFD and 90,000 BPD of liquids; the rate could be kept at plateau until 2010, from which production would decline,? he said, adding that a contract extension was necessary for Total and Inpex to invest to slow down the decline rate of the block.

Mahakam PSC represents today one third of Indonesia gas production and 9 percent of its oil production

?Total has been the efficient and responsible operator of the Mahakam PSC for over 35 years with its partner Inpex and the partnership will surely be the most suitable choice to manage the block,? he said.

He said Total and Inpex planned to invest around $8 billion in the next ten years on the Mahakam PSC to continue to put on stream the remaining undeveloped hydrocarbon resources in the block.

?Unlocking these reserves, through the continuation of such massive investments, requires a long term vision. This is the reason why Total and Inpex have officially expressed their wish to obtain for the Mahakam PSC an extension of the current contract beyond 2017,? he said.

?Total and Inpex have started discussions with the Authorities and the first millestones has been to present them the Mahakam long term production and investments perspectives. Such data will pave the way for the discussion on the PSC extension,? he added.

In the meantime, Total has no plan to divest interests in the Mahakam PSC and no obligation to do so under the existing contract, he said, apparently commenting on reports that Pertamina is seeking to 0 percent interest in the PSC.(alex/godang)