Mahakam PSC contract amended, Pertamina allowed to invest during transition period

Energy and Mineral Resources Minister Ignasius Jonan (left) and Deputy Minister Arcandra Tahar (right)
Energy and Mineral Resources Minister Ignasius Jonan (left) and Deputy Minister Arcandra Tahar (right) (image : Special)

JAKARTA (RAMBUENERGY.com) – The production sharing contract (PSC) of Total E&P Indonesie (TEPI), along with its partner Inpex Corp, to develop the Mahakam Block has been amended by the Indonesian Energy and Mineral Resources Ministry, which will allow state owned energy company PT Pertamina to invest during the transition period.

Total’s contract to develop Mahakam block will expire at end of 2017. The government has appointed and awarded PT Pertamina to operate and develop the block from Jan. 1, 2018. Currently, Total and Inpex own 50 percent interest respectively in the Mahakam Block.

Both Total and Inpex will still take part in the development of the block, however, they will hold minority stake.

Pertamina said it will invest US$180 million in 2017, during the transition time, with an aim to prevent natural decline of gas and oil production from the Mahakam block.

Currently, Mahakam Block produces 1,747 million standard cubic feet (MMSCFD) of gas per day and 69,186 barrels of oil and condensate per day. Next year, the gas production is projected to decline to 1,400 MMSCFD and oil output to decline to 50,000 bpd.

Pertamina President Director Dwi Soetjipto said the investment will be used to fund drilling of 19 wells in 2017, with an aim to prevent acceleration of output decline, considering that Mahakam is an ageing block.

These 19 wells are expected to start producing in 2018, when the operation of the block is under the control of Pertamina.

President Director of Total E&P Indonesie Hardy Pramono said Total together with Pertamina will work hand in hand to prevent the decline of production. “We (Total) together with Pertamina, under the supervision of SKK Migas, will continue to ensure the decline will not be significant. This is the hardest work during the transition period,” Hardy said.

Total and Inpex began developing the block in 1974. (*)

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