Total set to get $900m reimbursement from government
Wednesday, July 12 2017 - 07:37 AM WIB
Petromindo
Total E&P Indonesie, operator of the Mahakam block, and its partner Inpex Corp are slated to obtain reimbursement from the government worth US$900 million at the end of this year when their current contract over the block ends.
?Total will obtain $900 million at the end of the year as its Mahakam (block) contract expires. The sum is the total expenses (spent by the company) which has yet to be recovered,? said Amien Sunaryadi, Head of the upstream oil and gas authority SKK Migas.
Total?s contract over the Mahakam block in East Kalimantan applies the so-called cost recovery mechanism, under which oil and gas contractors can get reimbursement for expenses they made in operating upstream oil and gas assets. The government has recently introduced a new gross split scheme, to be applied to new oil and gas contracts, under which contractors will no longer get reimbursement in return for greater output split.
Amien said that Total has also obtained accelerated depreciation facility to help maintain the block?s production level as the company?s contract is set to expire.
Djoko Siswanto, a Deputy at SKK Migas, said, however, that if Total decides to continue participate in Mahakam block, the cost recovery sum of $900 million may not necessarily be reimbursed by the government entirely at the end of this.
The government has decided to transfer the Mahakam block to state-owned oil and gas firm PT Pertamina after the current contract expires at the end of this year. The government has been trying to woo Total and its partner Inpex to continue participate in running the Mahakam block to help maintain production level amid doubts over Pertamina?s capacity.
Total has earlier demanded a 39 percent participating interest in Mahakam as part of conditions for its continuing role in the block. Pertamina, however, insisted it was only wiling to allocate up to 30 percent interest in the block to both Total or together with Inpex.
Editing by Reiner Simanjuntak