Currently the block is 50 percent owned by French Total E&P Indonesie and 50 percent by Japan`s Inpex Corporation.
Jakarta (ANTARA News) - The government has not decided share participation of the regional administration in the Mahakam gas block, which is located in East Kalimantan.

The regional administration has demanded a 10 percent share participation in the block when the foreign contract for the block expires in 2017.

Currently the block is 50 percent owned by French Total E&P Indonesie and 50 percent by Japan`s Inpex Corporation.

After 2017, state oil and gas company PT Pertamina would likely be given the majority 51 percent stake with the foreign investors keeping the rest, Deputy Energy and Mineral Resources Minister Rudi Rubiandini said.

There are two options for regional administration`s 10 percent share in the block, Rudi said here on Wednesday.

The Indonesian and foreign shares are to be cut 5 percentage points each to make up the 10 percent stake for the regional administration or all 10 percent to be cut from the Indonesian stake, he said.

He said Total wants Pertamina to give the 10 percent stake for the regional administration cut from its 51 percent stake making it a 46 percent shareholder.

The management of Pertamina, however, demanded that Pertamina and the foreign partners each provides 5 percentage points to keep the largest stake for itself.

"This is the matter that has yet to be negotiated," Rudi said.

Pertamina has repeatedly said it alone could operate the Mahakam block and has asked the government to take over the block after the foreign contract expires.

A number of lawmakers and observes have also urged the government to take over the block to be handed over to Pertamina.

Total and Inpex has held the contract for the Mahakam block for 50 years and its last contract after being renewed will expire in 2017.

Energy and mining observer Komaidi Notonegoro from Reforminer Institute said the government should not delay making decision on the Mahakam block.

Delay would result in lower productivity as the investors would not invest more fund in the block until they know for what they spend their money, Komaidi said.

Total has been the operator of the block that feed the Bontang liquefied natural gas plant.

Blok Mahakam is estimated to still hold 12.7 trillion cubic feet of gas in reserves or 11.7 percent of known gas reserves in the country. (*)

Editor: Heru Purwanto
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