The revision would apply not only to Mahakam Block but to all other oil and gas blocks that have expiring contracts, to ensure a smooth transition process and avoid production decline.
PHE
Katadata

The government is finalising the revision of Regulation of the Minister of Energy and Mineral Resources (EMR) No. 15/ 2015 concerning the management of oil and gas working areas with expiring joint contracts. The aim is to facilitate the transition of expiring oil and gas block contracts, such as the Mahakam Block contract.

The ministry’s Director General of Oil and Gas I.G.N Wiratmaja Puja said this regulation will be one of the legal umbrellas for transition of the Mahakam Block from its current operator Total E&P Indonesie to Pertamina. “It’s been revised to lend greater clarity to the transition period,” he said at the EMR Ministry in Jakarta on Monday (29/8). (Read: Regulation on Pertamina’s Investment in Mahakam Block to be Issued Next Week)

Article 14 of the original regulation set forth provisions for the transition process, which say that if Pertamina were to get permission to manage the block, the existing contractor must cooperate with Pertamina and take steps to prepare for the transition before the contractor’s contract expired. Preparations would include access and use of data, assets and workforce.

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However, Wiratmaja said the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) asked the ministry to clarify the regulation. “So (Pertamina) would be able to invest before the transition. And the existing contractor would execute the investment plan,” he said.

(Read: SKK Migas Prepares Reference for Pertamina’s 2017 Investment in Mahakam Block)

He said the revision would apply not only to Mahakam Block but to all other oil and gas blocks that have expiring contracts, to ensure a smooth transition process and avoid production decline.

Meanwhile, SKK Migas is preparing another legal basis for the Mahakam Block in the form of a SKK Migas Decree. There will also be an agreement between Total E&P as the block’s current operator and Pertamina as the new operator starting 2018. These three regulations are scheduled for release this week.

Pertamina has also begun to prepare its investment plan for managing the Mahakam Block next year. The state-owned oil and gas firm will allocate US$ 1.5 billion, or some IDR 20 trillion, to maintain production in the block in East Kalimantan before it officially takes over in 2018. (Read: Pertamina Prepares IDR 20 T to Drill 19 Wells at Mahakam Block)

Pertamina’s President Director Dwi Soetjipto explained the funds would be used to finance the drilling of 19 oil wells during the second quarter of 2017, including development wells. “To avoid a significant decline in production in 2018,” he said last week (23/8).