Indonesia’s Pertamina Takes Over Eight Oil & Gas Blocks

Mahakam Block - Photo by Special Task Force for Upstream Oil and Gas

JAKARTA (TheInsiderStories)—Indonesian government handed over the management of eight working areas (WA) that expired its contract in 2018 to PT Pertamina. The investment potential for the first three-year worth of US$556.45 million.

Previously, Director General of Oil and Gas at the Ministry of Energy and Mineral Resources (MEMR), Djoko Siswanto, explained that the management of the WA will use the scheme of gross split.

The eight blocks namely North Sumatra Offshore block, Ogan Komering block, Southeast Sumatra block, Tuban block, East Kalimantan block, Attaka block, Tengah block, and Sanga-sanga block.

Details as follows:

1. WA Tuban: Contractor of PT Pertamina Hulu Energy Tuban East Java and Petrochina International Java Ltd. The first three-year commitment is $42.25 million and $5 million signature bonus, consisting of GGRP exploration studies, exploitation GGRP study, well service, facility maintenance, 3D seismic, exploratory drilling, exploitation drilling.

2. WA Ogan Komering: Contractor of PT Pertamina Hulu Energi Ogan Komering and Jadestone Energy (Ogan Komering Ltd). The first three-year commitment amounts to $23.3 million and $5 million signature bonus, comprising GGRP exploration, GGRP exploitation, re-entry and perforation studies, EOR study, well service, facility maintenance, well drilling infiltration, appraisal well and exploratory drilling.

3. WA Sanga-Sanga: PT Pertamina Hulu Sanga-Sanga Contractor, PT Karunia Utama Perdana and OPICOIL HOUSTON Inc. The first 3-year commitment is $ 237 million and $10 million signature bonus, comprising G & G, advanced 3D seismic reprocessing, exploration drilling, exploitation drilling.

4. WA Southeast Sumatra: Contractor of PT Pertamina Hulu Energi Offshore Southeast Sumatra and GHJ SES Indonesia. The first 3 year commitment is $130 million and $10 million signature bonus, consisting of GGRP / flow unit study, EOR study, water injection conversion, workover, 3 D / 4D seismic, infill drilling, field reactivation and EOR pilot.

5. WA North Sumatra Offshore: Contractor of PT Pertamina Hulu Energy NSO. The first 3-year commitment amounts to $18.5 million and signature bonus of $1.5 million, consisting of exploratory GGRP studies, 2D seismics, GGRP studies and exploration drilling.

6. WA East Kalimantan and Attaka: Contractors of PT Pertamina Hulu East Kalimantan. The first three year commitment is US $ 79.3 million and signature bonus of $1.5 million, consisting of exploration, exploitation drilling, workover well services, GGRP study and exploratory drilling.

7. WA Tengah (Amendment WA Mahakam and merger of WA Tengah): Contractor of PT Pertamina Hulu Mahakam. The first 3-year commitment amounted to $26.1 million, regional GGR studies, 3D seismic reprocessing, advanced GGR study and exploratory drilling.

“After a long discussion, the Ministry of Energy and Mineral Resources decide to give the eight blocks to Pertamina,” said the Head of Upstream Oil and Gas Regulatory Special Task Force Amien Sunaryadi in a press statement on Monday (16/04).

The government considered two factors in making the decision. First, to help Pertamina’s financial performance that currently pressured by the rising of oil price reached $70 per barrel, while the government mandates the Pertamina to report the price.

Secondly, accelerate the taking over process because it has been going for a long time. The deliberations on the transfer of eight blocks have been started since November 2016. In fact, some of the blocks are now expired, such as the Attaka Block, Tuban, and Ogan Komering.

Surnayadi explained any oil and gas companies that interested to join the operation in the eight blocks could discuss directly to Pertamina. Based on the MEMR decree No. 37/2016, the national oil company also should offer the 10 percent participating interest to local administration where the blocks are located.

The local administration will get the ease with no need to spend the investment to get the share. After the year, it can be repaid with part of the dividend.

Based on the Upstream Oil and Gas Regulatory Special Task Force, there are 22 oil and gas block contracts would expire between 2019 and 2026. Oil and gas blocks in Indonesia reaches 255 blocks in 2017 consists of 134 of onshore blocks, 83 of offshore blocks, and 34 onshore/offshore blocks.

It consists of 87 blocks in exploitation stage, 119 conventional exploration phase blocks, and 49 unconventional exploration blocks. For oil and gas blocks exploitation phase consists of 73 production blocks and 14 blocks in the development stage, while for exploration blocks consists of 88 active blocks and 31 blocks in the termination process. While the nonconventional blocks consist of 43 active blocks and 6 blocks in the termination process.

Email: fauzulmuna@theinsiderstories.com