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Indonesia govt, Pertamina, Total E&P begin talks on transition scheme for Mahakam Block

JAKARTA (rambuenergy.com) – The Minister for Energy and Mineral Resources Sudirman Said on late Friday facilitated a meeting between Total E&P Indonesia of France and Indonesia’s state owned oil and gas company PT Pertamina to discuss transition scheme for the operatorship of Mahakam Block, located in East Kalimantan.

Minister Sudirman at the meeting officially informed Total E&P Indonesie and its partner Inpex Corporation of Japan that the government has appointed Pertamina to operate Mahakam Block from January 1, 2018.

Earlier, Total and Inpex have proposed a transition period of five years after its contract expires at end March 2017. The government seems to have fast forward the transition period, before the Total E&P and Inpex contract expires. Minister Sudirman said the government has set two years transition period of 2015-2017.

“The government does not want to prolong the talks. We hope that the transition scheme would be finalized in the next two years,” said Minister Sudirman.

He noted the scheme would give a clear view as to how Total and Inpex fit in the new scheme. “However, it all depends on the B-to-B negotiations between Pertamina and Total in the next two weeks. We will not intervene,” he said.

Those attending the coordinating meeting were Pertamina President Director Dwi Soetjipto, President of Total E&P Indonesie Hardy Pramono and President Director of Inpex Indonesia Shunichiro Sugaya.

Senior officials from the energy ministry also joined the meeting, namely acting director general for oil and gas I Gusti Nyoman Wiratmaja, the Head for Performance Control Unit at the Energy and Mineral Resources Ministry Widhyawan Prawiraatmadja and the Head of the Indonesian Special Task Force for Upstream Oil and Gas business (SKK Migas) Amien Sunaryadi.

Minister Sudirman said Total and Inpex are ready to follow the government decision to ensure a smooth transition and are committed to maintain the production level of Mahakam block. “They are international (oil and gas companies) that would guard their reputation, therefore they won’t just go away,” he said.

Mahakam Block is an ageing gas block that has started production in 1966. The Mahakam Block PSC was signed on October 6, 1966 and expired on March 30, 197. The Total E&P’s contract to operate the block was extended for 20 years until 2017. Currently, Total and Inpex hold 50 percent working interest of Mahakam Block respectively.

Following is the key dates prior to the expiration of Mahakam Block contract as reported by detik.com:

  • March 27, 2015: Meeting to discuss operatorship of Mahakam Block
  • April 10, 2015: Finalization of Transition Scheme
  • May 1, 2015 – Dec. 15, 2015: valuation of the block by SKK Migas, finalizing terms and conditions by the Director General for Oil and Gas and resolving pending matters.
  • December 31, 2015: Adjustment of new PSC Scheme for Mahakam Block
  • January 1, 2016 – December 31, 2017: Transition period
  • January 1, 2018 – Handover of Operatorship of Mahakam Block
  • 27 Maret 2015 – Rapat pembahasan pengelolaan Blok Mahakam

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