"The transition will enable to continue the oil and gas production in the Mahakam block after Total E&P Indonesie decided to terminate its contract at the end of 2017," Dwi Soetjipto remarked here on Tuesday.
He said that Pertamina should invest in the Mahakam block as part of the efforts to avoid a significant decline in oil and gas production in 2018.
"Although Pertamina has invested in the Mahakam block, Total E&P Indonesie as the current contractor will carry out the investment project," he noted.
He pointed out that the work plan and budgeting for a plan of development in 2017 should be completed soon in an attempt to shorten the transition process.
"In addition, Total should declare its stance whether to join Pertamina or not after Total E&P Indonesia decided to terminate its contract at the end of 2017," he urged.
Till date, he noted, the French oil and gas contractor has yet to determine its stance, "including (its commitment) on the commercial side."
"Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan affirms that pending matters should be completed in one or two weeks," he informed.
Earlier, Head of the Performance Control Unit of the ESDM Widhyawan Prawiraatmadja stated that the government will issue a letter to Pertamina about the takeover of the management of Mahakam block after the contract expired in 2017.
"Meanwhile, we will issue another letter to Total to terminate the Mahakam block contract," he disclosed.
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 in favor of 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 of 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 Pertamina a long transition period before it takes 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 sale 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 countrys largest gas reserves.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2016
