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Ruling needs revision if Total allowed to hold 39% Mahakam Block shares

JAKARTA (RambuEnergy.com) – The Energy and Mineral Resources Ministry (ESDM) needs to amend the ruling if it decides to allow Total E&P Indonesie to own 39% shares of Mahakam Block under the new PSC contract.

Total E&P Indonesie’s contract to develop Mahakam Block in East Kalimantan will expire at end of this year. The block’s operatorship will then be handed over to Indonesia’s state owned energy company Pertmaina.

Under the existing energy ministry’s ruling, Total E&P Indonesie has an opportunity to acquire shares up to 30 percent. The remaining shares are owned by Pertamina 60% and 10% local governments.

Total was recently reported to have requested the energy ministry to acquire 39% shares of Mahakam Block. Minister for Energy and Mineral Resources Ignasius Jonan has said earlier that Total E&P has a good chance to still take part in the Mahakam’s development after its contract expire.

Currently, Inpex (operator) and Inpex Corp of Japan own 50% participating interest (PI) in Mahakam Block.

Mahakam Block, although it is an ageing block, remains as the largest gas producer in Indonesia. Industry players and the government are still hoping the existing operator will take part in the new PSC in order to assure that the block’s production will not be disrupted.

Director General for Oil and Gas at the energy ministry IGN Wiratmaja Puja said on the sideline of Indonesia Petroleum Association (IPA) Convention in Jakarta that Total cannot buy 39% shares of the Mahakam Block, unless the energy ministry amended the ministryy’s ruling. The current ruling limits Total to buy Mahakam Block shares a maximum of 30%.

“It (ruling) has to be revised if allowing Total to own 39% shares,” he said. (*)

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