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Indonesia govt to reveal new PI composition for Mahakam block after 2017

JAKARTA (rambuenergy.com) – The decision on who owns what shares in Mahakam block will remain unclear until 2017. President Joko Widodo is expected to decide the new composition of participating interests on the block after 2017, after the existing contract of Total E&P Indonesie to operate the block expires in 2017.

Industry players see the decision as a government’s move to allow the existing operator to concentrate in developing the block until its contract expires, while others consider the decision as government’s lack of decisiveness.

The situation is not conducive also for the existing operator as it could prepare the exit strategy in advance. Ideally, contract extension (or not) is decided three years before the contract expires so that the contractor can make preparatory steps.

Minister for Energy and Mineral Resources Sudirman Said told reporters on Tuesday that he has reported the result of the negotiation between Total E&P Indonesie, Inpex Corporation and PT Pertamina to the President.

“We have reported their standpoints (Pertamina, Total and INpex). We have also submitted recommendation (to the President). Now, we just have to wait for his (President Jokowi’s) wisdom,” Minister Sudirman said.

Total is currently the operator of the Mahakam block, with Inpex acting as non-operating partner. Both parties hold 50 percent interest in the block respectively.

Minister Sudirman has said earlier that the government has decided to hand-over Mahakam Block to the state owned Pertamina as the new operator of the block. However, the government also hinted that the existing operator (Total E&P) and its partner Inpex could still hold participating interest in the block beyond 2017 as the government wants to assure that the production of the block will not be disrupted.

Media reports said that Pertamina has requested to own up to 60 percent working interest in the Mahakam block, with the remaining interests to be shared by Total and Inpex.

Block Mahakam is an ageing block therefore it requires advanced technology and experience to develop the block. Therefore, involving existing operator is seen as a logical move.  (*)

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