Govt to Issue Decision on Transition in Mahakam Block Operation

TEMPO.CO, Jakarta - The government will issue decision on the transitional period of the operation of the Mahakam gas block off East Kalimantan, a government official said here on Tuesday.

The transition is prepared before state energy company PT Pertamina will take over the operation of the gas block from Frances Total E&P Indonesie, the contract of which will expire in late 2017.

Currently the block is owned by Total and Inpex Corporation of Japan each with a 50 percent share split with Total as the operator.

The decision would be issued next week, Oil and Gas Director General I Gusti Nyoman Wiratmaja Puja said, adding "it would be ready on Tuesday."

Wiratmaja said the decision on the transitional management would be issued by the Special Working Unit for Upstream Oil and Gas Business (SKK Migas).

The decision will serve as legal basis for the transitional activities in the operation of the Mahakam block, which holds one of the countrys largest gas reserves.

A government regulation gives Pertamina the right to have a transitional period from the contractors, with contract about to expire.

"In addition to the decision of the SKK Migas, Pertamina and Total would sign an agreement on activities during the transitional period," Wiratmaja said.

President Director of PT Pertamina Dwi Soetjipto said the legal basis for the transition is expected to be ready in one or two weeks.

Dwi said the transition agreement is necessary to maintain the gas production rate of the gas block after the take over in January, 2018.

The legal basis is imp0ortant as Pertamina should have started investing in the block to prevent a shrinkage in production in 2018.

It is arranged that Pertamina will provide the investment fund but Total E&P Indonesie would implement the investment project.

Earlier PT Pertamina said it would invest around US$2 billion annually into the gas block if given control of Mahakam.

ANTARA