Pertamina's Worket at Offshore Project - Photo by PIEP

JAKARTA (TheInsiderStories)–Indonesia’s state-owned oil and gas company PT Pertamina (Persero) officially taken over Sanga-Sanga oil and gas block from Vico Indonesia and will integrate its operation with Mahakam block.

Pertamina’s Senior Vice President Upstream Strategic Planning, Portfolio & Evaluation Meidawati said on Wednesday (8/8) that the integration with Mahakam block aims to improve efficiency, especially facilities utility and production cost.

She said the company committed to maintain Sanga-Sanga’s oil and gas production level with an investment of US$237 million for three years. Pertamina will drill two wells this year and other 29 wells in 2019.

Sanga-Sanga block produces 10.753 barrel oil per day (bopd) and 80.7 million standard cubic feet per day (mmscfd) by July 2018, according to the Upstream Oil and Gas Regulatory Special Task Force data.

Pertamina estimated the block has accumulative production of 258 million barrel oil equivalent (MMBoe).

Sanga-Sanga block that located in Kutai Kertanegara, East Kalimantan, is one of the eight expired blocks that be given to Pertamina on April 20, 2018.

Chairman of the Upstream Oil and Gas Regulatory Special Task Force Amien Sunaryadi said the government gives Sanga-Sanga block to Pertamina in order to improve national energy security.

“All preparations for transfer management that have been prepared in this short time are expected to be a challenge for Pertamina to maintain the operational continuity so that it can increase the contribution of oil and gas production to the country,” he added, as quoted by Bisnis Indonesia.

Pertamina controls 20 percent of national oil and gas production or equivalent to 162.000 barrel per day by April 30, 2018, after taking over Mahakam Block. Prior to this acquisition, the state-owned company only controlled 15 percent of national production.

With current production rate, Pertamina is still losing to Chevron and ExxonMobil that control 27.3 percent and 54 percent of Indonesia’s oil and gas production, respectively.

This condition made the Indonesian government gives oil and gas blocks that will expire to Pertamina. One of them is the Rokan Block after it expires in 2021, which is estimated to have more than 1.2 billion barrels of oil in reserves.

Pertamina will control 60 percent of national production when Rokan block is officially controlled by the company, according to CNBC Indonesia.