Total proposes transition period for Mahakam

By Johannes Simbolon

Total E&P Indonesia (TEPI) is proposing a transition period for the Mahakam block after the contract on the block expires on Dec.31, 2017 to allow the government to make decision on futher extension in good conditions.

?We proposes a transition period of five years. The transition period will thus end in 2022, the time Mahakam?s contract with FSRU Jawa Barat end,? Jean-Marie Guillermou, Total E&P President for Asia Pacific, told reporters in Jakarta on Friday.

TEPI proposes the formation of a new Operating Body to handle the block after the expiry of its contract. The new operating body, in which state owned oil and gas firm PT Pertamina will participate, will run the block throughout the transition period.

?During this Transition Period, Total would transfer its know-how and experience on the field to the new Operating Body and will develop locally the necesssary expertise and technical support to the Operating Body,? he said.

He said Mahakam?s operation is a complex and sensitive subject. The life of the block will continue after Dec. 31, 2017 and changes that will occur on this date have to be taken carefully

It is a complex subject because of the nature of of its reservoir, the number of its wells and intallation, the size of the organization and the management issue. It is a sensitive subject because the commitments made for gas deliveries to the markets (domestic and exports), the large investment to be made, the status of the personnesl involved in the operations and the revenues generated for the state.

There are around 21,000 workers now working for Mahakam, either as Total?s workers or contractors? employees. The block generated US$6 billion in revenue for the state last year.

?For every $1 spent in Mahakam, the block generates $6 revenue for the government,? he said.

Aside from the contract with FSRU Jawa Barat, it also has existing contracts with Japanese western buyers.

?There is a matter of urgency as we need feasibility to invest $2.5 billion per year to continue the fight against the natural decline of production from these fields. Indeed, operations need several years of anticipation. For example, currently, we ned to integrate Northwest Tunu 3D seismic results in order to define the locations of future wells and the target to be drilled in the area. Transition needs preparation of a plan, scope of work, definition of changes etc,? he said.

?Therefore we expect the new administration to put this matter as their first priority and make decision as soon as possible,? he said.