Credit: the Ministry of Energy and Mineral Resources

JAKARTA (TheInsiderStories)–The Indonesian government has officially signed the contract extension of four oil and gas blocks, with their scheme changes into the gross split from previously cost recovery-based. The government securing investment commitment of US$148,4 million in five years from the deal.

The contracts are the oil and gas blocks expired in 2019 and 2020 namely Bula block, Malacca Strait, Kepala Burung block, and Salawati block.

Energy and Mineral Resources Ministry Oil and Gas Director General Djoko Siswanto said on Wednesday (11/07) two blocks are extension contracts and the others are a joint management contract between the existing contractor with Pertamina for 20 years. The government hopes the contractors can immediately take over management to maintain and improve production.

Bula block has a sharing contract of 66.5 per cent for the contractor and 33.5 per cent for the government with a working commitment of US$5.25 million in the first five years. Bula block signed with Kalrez Petroleum (Seram) Ltd as an operator, where the existing contract will expire on October 31, 2019.

Production share in the Malacca Strait block is 59 per cent for the contractor and 41 per cent for the government with a total working commitment of US$45.75 million in the first five years. For the gas, 64 per cent for the contractor and 36 per cent for the government. Malacca Strait block is signed with EMP Malacca Strait S.A as an operator and PT Imbang Tata Alam. The existing contract will expire on August 4, 2020.

In the Kepala Burung block, the production share is 48.5 per cent for the contractor and 41.5 per cent for the government, and 53.5 per cent for the contractor and 46.5 per cent for the government in gas production. The total working commitment in this block reaches US$61.22 million. Kepala Burung block signed with Petrogas (Basin) Ltd as an operator and PT Pertamina Hulu Energi Salawati Basin. The existing contract will end on October 22, 2020.

In Salawati block, the total working commitment reaches US$36.25 million in the first five years, while the sharing contract is 48 per cent for the contractor and 52 per cent for the government. Salawati block is signed with Petrogas (Island) Ltd as operator and PT Pertamina Hulu Energi Salawati. The block will expire on April 22, 2020.

The government receives US$5.5 million in signature bonus from the four contracts of which Bula block US$1 million, Salawati block US$1 million, Kepala Burung block US$1 million, and Malacca Strait US$2.5 million.

Siswanto said the Participating interest (PI) owned by the contractors including 10% to be offered to regional-owned companies.

Bula block currently produces 209.95 barrel oil per day (bopd), while Malacca Strait block produces 2,202.24 bopd of oil and 3.01 MMScfd of gas. Salawati block produces 1,117.56 bopd of oil and 2.56 MMscfd of gas, while Kepala Burung block produces 4,211 bopd of oil and 20.9 MMscfd of gas.

The Secretary-General of the Ministry of Energy and Mineral Resources Ego Syahrial hoped the decision to extend expiring contracts early will prevent production from falling. In addition, he expected this decision could increase the state revenues.

Email: fauzulmuna@theinsiderstories.com

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