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East Kalimantan local governments may get 19% in Mahakam, Pertamina 51%

JAKARTA ( – The working interest composition in Mahakam Block after Total E&P Indonesie’s existing contracts expires in 2017 is not been finalized yet. However, the East Kalimantan Governor Awang Faroek Ishak claimed that the new working interest composition for the development of the block has been drafted.

Governor Awang Faroek was quoted by state owned news agency as saying that the existing operator PT Total E&P Indonesie would get 30 percent interest in the Mahakam Block, while national entities would hold 70 percent.

Of the 70 percent, Pertamina, the state owned oil and gas company would hold 51 percent interest, while local governments in East Kalimantan would own 19 percent — East Kalimantan province 11.4 percent and Kutai Kartanegara Regency 7.6 percent, Awang Faroek said.

The East Kalimantan provincial government will form a consortium to hold the 11.4 percent shares, consisting of a regional government owned company (BUMD), called PT Migas Mandiri Pratama and a private company PT Yudistira Bumi energy (YBE).

The Kutai Kartanegara regency government also plans to set up a regency owned company (BUMD) and will team up with a private company.

The Enegy and Mineral Resources Minister (ESDM) Sudirman Said told reporters recently that the central government will make sure that the shares allocated for local governments may not be transferred to private sector. He does not want the Newmont Nusa Tenggara (NNT) case is replicated by the East Kalimantan. In the case of NNT, the West Nusa Tenggara provincial government and Sumbawa regency government teamed up with a subsidiary of Bakrie group, as a result, the local government almost gain no benefit from holding shares in NNT.

On Tuesday, Minister Sudirman Said told reporters in Lhokseumawe while accompanying President Joko Widodo visiting the area, said that the government has the interest to maintain production and revenues contributed by Mahakam Block. Therefore, the government wants Pertamina which is expected to become new operator of the block collaborates with existing operator, Total E&P Indonesie in developing and operating the Mahakam block.

Last week, Total E&P Indonesie said it has requested the government to set a transition period before the block’s operatorship is fully handed over to the new operator. Total operated the block along with its partner (non-operator) Inpex Corporation of Japan.

Total E&P Indonesie has developed the block since 1967. Its contract was extended in 1997 for 20 years. Some experts have said the Mahakam block is one of the most complex gas block in the world as it located in swamp area and its reservoirs were small and scattered. (*)


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One comment

  1. That’s really thnnikig at a high level

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