Deputy Minister for Energy and Mineral Resources Susilo Siswoutomo said the value of the compensation depends on the remaining proven gas reserves in the Mahaklam block.
Jakarta (ANTARA News) - The government will demand Total EP Indonesie to pay certain compensation if it wants to renew its contract for the Mahakam gas block in East Kalimantan.

Deputy Minister for Energy and Mineral Resources Susilo Siswoutomo said the value of the compensation depends on the remaining proven gas reserves in the Mahaklam block.

"The value of the compensation is yet to be calculated," Susilo said here on Friday.

He said other oil and gas contractors are also pay compensation if they want to renew their contracts.

He cited PT Chevron Pacific Indonesia will also pay compensation for its Siak Block in Riau, its contract for which will expire in Nov. 2013.

Susilo said after the expiration of Total`s contract in 2017, the state will automatically take over control of the Mahakam Block.

The French oil and gas giant has indicated strong interest in renewing its contract saying it would invest heavily in the block if it is given contract extension.

The block still has big reserve remaining despite after long years of exploitation, Susilo said, adding the value of the remaining reserves, however, is yet to be calculated.

He said PT Pertamina (Persero), if it is also required to pay compensation, the state oil and gas company may not have enough money.

Pertamina has been widely suggested to take over as the operator of the big gas block after Total ends its present contract in 2017.

The company has also indicating interest in taking over the gas block, which currently supply gas to the Bontang liquefied natural gas plant in east Kalimantan.

Currently the contract for the Mahakam block is held by Total and Japans`s Inpex Corporation splitting the stake by 50 percent each with the French partner as the operator.

The first contract was signed in March 1967 for 30 years and it was extended for 20 years in March 1997 for a total of 50 years until March, 2017.

The block produces 65,204 barrels of oil per day and 1,709 MMSCFD of gas.(*)

Editor: Heru Purwanto
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