TEMPO.CO, Jakarta - East Kalimantan Mahakam block oil and gas fields transition from Total E&P Indonesie to PT Pertamina should be conducted immediately before the contract expires in 2017, Energy and Mineral Resources (ESDM) Minister Sudirman Said stated.

"We have urged Pertamina to initiate talks with the existing operator (Total), so that the transition process goes smoothly," he said on Friday.

The ministry will facilitate discussions between Pertamina and Total next month to ensure that the transition proceeds smoothly.

"Pertamina should follow the transition process, so that the information, knowledge, and technology can be managed together," he said.

Previously, Head of the Performance Control Unit of the ESDM Widhyawan Prawiraatmadja stated that the government will issue a letter to Pertamina containing the management takeover of Mahakam block after the contract expired in 2017.

"Meanwhile, we will issue another letter to Total to terminate the Mahakam block contract," he noted.

According to Article 28 of Government Regulation No. 35/2004, there are two available options about expired oil and gas blocks contracts.

First, the contract is extended to the existing operators. Second, Pertamina can propose to the ESDM minister to take over oil and gas blocks after its contracts with foreign operators end.

The ESDM minister can approve the request as long as Pertamina is fully owned by the state.

PT Pertamina has allocated Rp315 trillion, or US$25.2 billion, to operate the Mahakam block in East Kalimantan for 20 years after 2017.

Minister Said remarked recently that the government believes that Pertamina will be able to operate the block.

The block produces gas equivalent to around 280 thousand barrels of oil per day.

Prawiraatmadja noted that a contract between Pertamina and Total could be signed in 2015 although it would be effective only after the termination of Totals contract in 2017.

"That will give a long transitional period for Pertamina before it will take over the operations of the block from Total," he stated.

During the transitional period, several issues related to the contract could be settled such as the sales of gas and oil, supporting services, and the workers, Prawiraatmadja said.

Total E&P Indonesie will end its contract after 50 years of operating the block, which is one of the country's largest gas reserves.

ANTARA NEWS