JAKARTA (TheInsiderStories) – The Special Task Force for Upstream Oil and Gas Business (SKK Migas) at the Energy and Mineral Resources Ministry has approved two Mahakam Block transition agreements, called Bridging Agreement (BA) and Funding Agreement (FA), which have been signed by Total E&P Indonesia, the existing operator of Mahakam Block, Inpex Corp and state energy company PT Pertamina.
The two agreements are aimed to ensure smooth transition of the Mahakam Block. Total E&P Indonesia’s operatorship right for Mahakam Block will expire on Dec. 31, 2017. The block will then be handed over to the new operator Pertamina Hulu Mahakam, a subsidiary of Pertamina.
The transition agreements provide guidelines for the operating activities during the transition period by the existing operator for the interest of Pertamina Hulu. The Funding Agreement provides mechanism of financing provided by PHM to be taken by TEPI in 2017.
Vice President Corporate Communication Pertamina Wianda Pusponegoro said the SKK Migas approved the agreements which were signed by PHM, Total E&P Indonesie and Inpex on March 3, 2017. The draft agreements have been assessed and discussed by PHM, Total E&P and Inpex since mid 2016.
“The transition of operatorship of Mahakam Block to PHM will be done while maintaining production sustainability,” she said. Based on the two agreements, Total E&P will undertake a number of operational activities on behalf of Pertamina Hulu Mahakam.
Total E&P Indonesie has been operating the Mahakam Block since 1966. Mahakam PSC contract was last extended in 1997 for 20 years until end 2017.
Meanwhile, the Energy and Mineral Resources Minister Ignasius Jonan said at the weekend while visiting Mahakam Block that the Indonesia government wants Pertamna to offer 39% participating interest in Mahakam Block to Total E&P, the existing operator in order to ensure sustainability of production of the gas block. Pertamina will hold 51% and the remaining 10% is allocated for the local governments in East Kalimanan.
Mahakam Block is the largest gas block in Indonesia, contributing 20% of Indonesia’s natural gas production. The block consists of fields, namely Peciko, Tunu, Tambora, Sisi Nubi, South Mahakam, Bekapai and Handil. The block covers 2,738.51 square kilometers, located in East Kalimantan. The block records annual average gas production of 1,635 MMSCFD and crude oil 63,000 bpd. (*)