TEMPO.CO, Jakarta - State-owned oil and gas company Pertamina director for upstream industry Syamsu Alam said that the company has signed a bridging agreement with Total E&P Indonesie (TEPI) on the operatorship of the Mahakam Block. Pertamina’s subsidiary PT Pertamina Hulu Mahakam (PHM) is willing to invest but Total will be the executor.
“We will arrange the mechanism, which includes ensuring all SOP for drilling to keep using the standards set by Total as the block still belongs to Total in 2017,” Syamsu said yesterday at Pertamina office in Central Jakarta.
Syamsu noted that Pertamina had earlier planned to drill 19 oil wells this year but the plan has been scrapped and it will only drill 6-8 oil wells in the Mahakam block. Pertamina has earmarked USD190 million for oil well drilling and other activities. “But it won’t be that easy because there are issues such as taxation, etc. when Pertamina provide funds to Total. Meanwhile, the reservoir there would see a sharp production decline if no drilling activities are carried out,” he revealed.
According to Syamsu, the amount of drilling in 2017 would not have an instant impact as the production would only start in 2018. He said that the company is prepared to drill eight oil wells and will carry out more next year.
The government has named Pertamina’s subsidiary Pertamina Hulu Mahakam (PHM) as the operator of Mahakam work area beyond 2017 and PHM had signed a cooperation agreement on December 29, 2016, to operate Mahakam block starting January 1, 2018. During the transitional period, from the signing of the cooperation agreement to the effective date of January 1, 2018, Total will continue its oil and gas activities, including drilling activities in Mahakam work area.
The bridging agreement between Pertamina and Total was signed on March 13, 2017.