Vice Minister says Mahakam block is for Pertamina
Tuesday, October 23 2012 - 02:13 AM WIB
Vice Minister of Energy and Mineral Resources Rudi Rubiandini stressed that the gas-rich Mahakam Block in East Kalimantan would be handed over to state-owned oil and gas firm PT Pertamina once the contract of the current operator PT Total E&P Indonesie expires in 2017.
?The Mahakam Block for certain will be for Pertamina. Who says that it would not be for Pertamina?? said Rudi following a meeting with House of Representatives Commission VII on energy on Monday.
Rudi, however, said that Pertamina will have to collaborate with other companies in managing the block particularly in the first five years after the transfer from Total to help ensure that production will not drop.
?The operator will be Pertamina, but will be assisted by the others. It?s called collaboration. There?s no one saying that Pertamina will be kicked out (from the block),? he explained, pointing out that one possibility is for Total to be retained as the operator of the block during the first five-year period after its existing contract expires. Later on, it would be fully run by Pertamina.
Elsewhere, regarding the percentage of shares to be held by Pertamina in the Mahakam Block, Rudi said that it?s still being discussed. He, however, indicated that Pertamina could have between 51-70 percent shares, included in it the ownership of local administration-owned company. The remaining shares will be given to other interested production sharing contractors.
Rudi said that the Mahakam Block and the various assets in it will be fully owned by the state once the existing Total E&P contract expires in 2017. Parties interested in managing the block including Pertamina and other PSCs must provide huge funds to be paid to the state.
?If the (gas) revenue sharing mechanism (in the past) was 70:30, now the state must obtain a revenue portion of greater than 70 percent,? Rudi said, pointing out that unlike in the past, the Mahakam Block is now already completed with various facilities, all of which will also fall into the hands of the government once the existing contract of Total E&P expires.
Total E&P Indonesie has been managing the block since March 1967. The first contract expired in 1997, which was extended for another 20 years until 2017.
Editing by Reiner Simanjuntak