Jakarta (ANTARA News) - The government will hand over the operation of the Mahakam oil and gas block to state-owned oil and gas company Pertamina when the contract of Total E$P expires in March 2017.
The Work Control Unit Head of the Ministry of Energy and Mineral Resources (ESDM) Widhyawan Prawiraatmadja said here on Friday that the government will soon issue a decision on that effect.
He explained that the government will fully transfer the Mahakam Block to Pertamina. It will be up to Pertamina to decide on the management of the oil and gas block after 2017.
"We will hand over the Mahakam Block to Pertamina and Pertamina will be pleased to manage it to its maximum potential for the state. We are waiting for a response from Pertamina," he noted.
He stated the management options for the oil block after 2017 will be decided by Pertamina. It can also cooperate with earlier operators Potal E&P Indonesie and Inpex Corporation through a scheme that will benefit the state.
Widhyawan said one of the possible cooperation schemes is that Pertamina will get the opportunity to operate an oil block belonging to Total overseas.
"If Total is given a chance to operate the Mahakam, we should see what Total gives us. We will give them a chance to make a business deal and will facilitate it," the ESDM official said.
However, no matter what option Pertamina chooses, it should be able to convince the government of the best benefits it can give the state.
He also asked Pertamina to make a proposal on the development of the Mahakam oil field in the future.
"It was the government that was pressurized in the past. Now, it is the government�s turn to ask for development proposals," he asserted.
The French multinational company was awarded the work contract for the Mahakam Block in 1967 for a period of 30 years.
In 1997, Total got a contract extension for 20 years, until March 31, 2017.
Last year, the oil and gas contractors spokesman, Kristanto Hartadi, had said that the countrys largest natural gas producer had aimed to spend around Rp73 trillion (US$7.3 billion) in investment through 2017 to maintain the blocks production.
Total E&P Indonesie, which is responsible for nearly one-third of the countrys total gas production, had earlier expected to produce 1.1 billion cubic feet (bcf) of natural gas per day by 2017 solely from the block, if the $7.3 billion investment plan proceeded, according to Kristanto.
The block now yields 1.7 bcf of gas and 67,000 barrels of condensate per day.
The block supplies the majority gas needs of the Bontang liquefaction plant, which is operated by PT Badak NGL. Most of the liquefied natural gas (LNG) from the plant is exported to Japan.(*)

Editor: Heru Purwanto
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