Total seeking extension of Mahakam PSC contract

French oil giant Total E&P Indonesie has applied for an extension of its production sharing contract (PSC) over the Mahakam gas block in East Kalimantan for another 20 years until 2037.

"Total has formally submitted the application for the extension of the Mahakam contract," the head of the oil and gas upstream agency BP MIGAS, Kardaya Warnika said in Jakarta on Monday.

Kardaya said that the agency was still studying the contract extension proposal. "The contract extension will not automatically get approval," he added.

Under the existing contract, Total has the rights to develop the Mahakam gas block until 2017. The company is allowed to apply for the contract extension 10 years before the contract is expired.

Earlier, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that government has set up a team to negotiate Mahakam PSC contract extension, which expires in 2017. He said that the new terms and conditions of the extension must be more beneficial to the state.

Mahakam PSC, where Total and Japanese firm Inpex have equal interest, is currently Indonesia? top gas producer, supplying 75 percent of Bontang LNG?s gas requirement. The block is producing at plateau rate of 2.6BCFD. Bontang LNG is now scrambling for new gas supplies to meet its commitment to East Asian buyers. (*)