"After the contract has expired, the entire assets would be automatically returned to the state," Kurtubi said.
Samarinda, East Kalimantan (ANTARA News) - Leading Indonesian oil expert Dr. Kurtubi said the government should take over full control of the Mahakam gas block in East Kalimantan when the foreign operator ends its contract in 2017.

"After the contract has expired, the entire assets would be automatically returned to the state," Kurtubi said here on Thursday.

The state would own all remaining gas reserve and the facilities as well as infrastructure, he added.

The government would break no international law by taking over the operation of the gas block after the contract has expired, he said.

The block is operated by France`s Total E&P Indonesie, which owns the block jointly with Inpex Corporation of Japan and the contract will expire in 2017.

The foreign investors signed the Mahakam Block contract with the government in March 1967 and the contract has been extended several times.

Total is still keen on renewing the contract, but the government has said it would not renew the contract.

"If the contract is extended or the block is awarded to other investors, the government will share the profit with the investors," he said.

The natural wealth should be used for the prosperity of the people as ruled by the country`s constitution, he said.

Currently the country needs guarantee in gas supply to feed the domestic industries , he said, adding domestic gas requirement has increased rapidly from year to year.

"The requirement will be fully met if we take over the operation of our gas reserves," he said.

The director of Center For Petroleum and Energy Economics Studies (CPEES) said several years before the contract expires, the government through state companies should have been involved in the operation that the process of production does not have to be stopped by the due date.

"Mechanism is impossible to be carried out as long as the management of the oil and gas wealth is entrusted to non business agency like BP Migas ," he said.

BP Migas, the upstream oil and gas regulator has recently been disbanded by the Constitutional Court for not being in line with the State Constitution.

"Oil and gas producing provinces , should be involved in taking over blocks when the contracts held by foreign investors have expired," he said.

Companies owned by the regional administrations (BUMD) could be included in a consortium for the take over, he added.

He said takeover should be 100 percent by the government through state companies (BUMN) and BUMD.

The Mahakam Block, which supplies gas to the Bontang liquefied natural gas plant produces around 2,200 million cubic feet of natural gas per day .

The block had an original reserve of 27 trillion cubic feet and from 1970 until 2011, 50 percent of around 13 tcf of the reserve has been exploited with a gross income of US$100 billion, the East Kalimantan People Alliance for Mahakam Block, said.

The remaining reserve based on the prevailing price, would be worth around US$187 billion , Surahman, an alliance member, said.

"Therefore, it is time for the country to take over operation of all state assets," he said.

He said operation of the oil and gas assets should be handed over to state energy company PT Pertamina, in cooperation with regional administration.(*)

Editor: Heru Purwanto
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