JAKARTA (rambuenergy.com)– The Indonesian Minister for Energy and Mineral Resources Sudirman Said on Friday announced that the government has decided to award state owned oil and gas company PT Pertamina 70 percent participating interest in the gas rich Mahakam Block from January 1, 2018, while the remaining 30 percent is to be shared by Total E&P Indonesie, the existing operator, and Inpex Corporation of Japan.
Minister Sudirman told a press conference that portion of the participating interest will be given to the East Kalimantan local government owned companies (BUMDs) – East Kalimantan provincial and Kutai Kartanegara regency governments.
Mahakam Block is currently operated by Total E&P and owns 50 percent working interest, while the other 50 percent interest is held by Inpex Corporation as non-operating partner.
Total began operating the block since October 6, 1966. Its contract expired on March 30, 1997 and was then extended for 20 years until December 31, 2017. Mahakam Block began producing gas from 1974 and sends the gas to the nearby Bontang LNG plant before it (LNG) is exported to buyers abroad.
Both Total E&P and Inpex has requested the Indonesia government to make another extension. The Indonesian government, however, declined the proposal and decided to handover the operatorship to state owned oil and gas company Pertamina.
Total expects the Mahakam gas block’s proven reserves to fall to 2.7-3 trillion cubic feet (tcf) by 2017 and falls further to 1.3-1.6 TCF in 2018 due to natural depletion from 4-4.5 TCF of gas at the end of 2012.
Mahakam block is located in offshore and onshore East Kalimantan, with some parts are located in swamp areas, making the block to be considered as one of most complex gas blocks in Indonesia. (*)