JAKARTA (Rambu Energy) – Total E&P Indonesia, the operator of Block Mahakam, has given a presentation to the Indonesian government and state owned oil and gas company PT Pertamina on the latest oil and gas reserves of Mahakam Block. The presentation was conducted before the government makes a decision on Mahakam Block operatorship status.
Acting Director General for Oil and Gas at the Energy and Mineral Resources Ministry (ESDM) Naryanto Wagimin said that the presentation held recently at a hotel in Jakarta was attended by directors of Pertamina, representatives of the Director General for Oil and Gas office and the Special Task Force for Upstream Oil and Gas Business (SKK Migas).
Total E&P’s contract to operate the block will expire at end of March 2017. Total E&P is partnering with Inpex Corporation of Japan in developing the block. Total E&P and Inpex have expressed their interest to extend the contract and at the same time opens opportunity to jointly develop the block with Pertamina.
Total has requested the government to allow for a transition period before the block is operated by Pertamina to allow smooth transition and ensure the block’s production is optimized.
Earlier, Naryanto Wagimin has said that the government favors Pertamina to become the operator of Block Mahakam post 2017 and requested Pertamina to partner with existing operator of the Block. The government is now awaiting for proposal from Pertamina.
Wagimin said in a statement published by his office website that Pertamina will be given a priority to operate the block. At end of November, Pertamina is scheduled to visit Block Mahakam to assess the block’s reserves data and latest project developments.
Wagimin said Pertamina has a chance to holds majority participating interest in the block of up to 80 percent. However, he is not confident that Pertamina can fully own and operate the block given huge amount of annual investment to develop the block. Observers have also said that the complexity of the block should pave a way for the involvement of existing operator of the block.
The government, Wagimin said, is waiting from proposal from Pertamina on its plan to develop the block as well as its capability. “The maximum time (given to Pertamina to prepare the proposal) is three months since last week,” said Naryanto Wagimin.
Currently, Total E&P Indonesia and Inpex holds 50 percent participating interest in Mahakam Block respectively. Total signed the first contract to develop the block on March 31, 1967 for 30 years. On March 31, 1997, its contract was extended for 20 years until March 31, 2017.
Total E&P and Inpex invest around US$2.5-US$2.6 billion per year to maintain the block’s gas and oil production as well as develop new fields. Mahakam Block is an ageing block, therefore it requires huge investment every year to prevent the block’s natural declining rate. (*)