Total proposes transition period in managing Mahakam block

By Febry Silaban

Total EP Indonesie (TEPI), a subsidiary of French firm Total SA, has proposed a transition period in managing the Mahakam block, offshore East Kalimantan, should its current contract which expires in 2017 is not extended, to help avoid a drastic drop in production.

"We have proposed a transitional solution post-2017 so that the continuity of production and revenue for the state as well as the fulfillment of the obligation of gas supply to the buyers can be maintained," company President Director/General Manager of TEPI Hardy Pramono said on Monday on the sidelines of the company?s project inauguration ceremony.

Elsewhere, Hardy was quoted as saying that the company has suggested for a five-year transition period to operate the Mahakam block alongside its partner Inpex.

?Total would remain in charge of operations, but it won?t stand alone. The government is then free to choose who will operate it afterwards,? Hardy was quoted by The Jakarta Post as saying.

?We?re just giving them a fair warning. It?s up to the government, but it?s best for the country that the decision be made swiftly.

TEPI has been seeking for an extension of the Mahakam block contract since 2007 to allow the firm to inject more investment in developing the block. There has been increasing pressure, however, for the government not to extend the contract to allow state-owned oil and gas firm PT Pertamina to operate the block.

The Mahakam block contract was signed in 1967 and in 1997 was extended for 20 years until 2017. Total and its Japanese partner, Inpex, are currently operating the block with 50 percent interest in it each.

Editing by Reiner Simanjuntak