TEMPO.CO, Balikpapan – France'sTotal E&P Indonesia and Japan's Inpex Corp's management contract in East Kalimantan's Mahakam block will expire in March 2017. Each company controls 50 percent stake in the oil and gas block with a 12.5 TCF potential worth some Rp1.2 quadrillion.

The government has asked state oil and gas company PT Pertamina to provide a thorough analysis over its proposal to take over the block's management. The government is also preparing to allocate 10 percent participating interest for regional governments in the area.

The East Kalimantan provincial government has appointed local company PT Yudhistia Bumi Energi as the PI holder. Meanwhile, the Kukar District Government relies on oil and gas company PT Mandiri Pratama.

The East Kalimantan Mining Advocates Network Organizations (Jatam) questions the appointment of those local companies.

"Based on information we received, they are just brokers of foreign financial institution Morgan Stanley," Merah Johansyah, the mining advocate network's official said on Monday, March 30.

Merah said the two companies can be considered small-time businesses in the national of oil and gas industry, presumably with little experiences, minimum of seed money and lack of competent human resources.

He fears that Mahakam block's PI will be controlled by foreign companies and provide little to its surrounding community.

Jatam is demanding the government to clarify and elaborate their reasons for appointing PT Yudhistira Bumi Energi and PT Migas Mandiri Pratama. The people of East Kalimantan and Kutai, he said, must be given a full explanation about PI management plan of the Mahakam block.

The Mahakam Block currently produces 1.750 MMCFD of gas and 66.400 bpd oil.

S.G. WIBISONO