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JAKARTA (RambuEnergy.com) – The state-owned energy company PT Pertamina will need huge amount of money to fund the development of Rokan Block in Riau province once the block is handed over to the company in 2021. To fund the development, Pertamina is considering to raise US$700 million from issuing global bonds.
Block Rokan, one of the largest but ageing oil block in Indonesia. Before Cepu Block began its production, Rokan Block has been the largest oil producing block in Indonesia.
The block has been operated by PT Chevron Pacific Indonesia for around 50 years. In early August this year, the Indonesian government decided not to extend Chevron’s contract to operate the block, which will expire in 2021.
In April, Rokan Block’s oil production stood at 210,280 barrels of oil per day (bopd) while its gas production was 24.26 million cubic feet per day (mmcfd). Meanwhile, its recoverable reserves are estimated to stand between 500 million to 1.5 billion barrels of oil equivalent, according to the energy ministry data.
Pertamina is required to pay signature bonus of US$784 million or around Rp11.3 trillion in return for securing the right to develop the block. Chevron has also been interested to carry on its contract, however, the government turned down its interest and opted to award Pertamina instead, after the state-owned company offered higher signature bonus.
Developing the block would certainly requires significant amount of fund. The State Owned Enterprise Minister Rini Soemarno said Wednesday that Pertamina is seeking to issue global bonds worth US$700 million later this year.
Deputy Energy and Mineral Resources Minister Arcandra Tahar argues that Pertamina offered better plan, namely larger size of the signature bonus, a five-year working commitment, the government’s take of the block’s revenue and the split demanded by the applicants.
Under the planned new contract, Pertamina will operate Rokan Block until 2041.
Pertamina promised a US$784 million signature bonus, a $500 million five-year working commitment covering exploration activities and $57 billion in potential state-revenue over a 20-year period.
The hand-over of the block to Pertamina was the second major block that has been awarded to Pertamina, after Mahakam Block. (*)
Written by Staff writer
Edited by Roffie Kurniawan (roffie.kurniawan@gmail.com)
