Selasa, 10 Maret 2015

INDONESIAN GOVERNMENT TO TAKE OVER MAHAKAM BLOCK

By Andi Abdussalam
          Jakarta, March 10 (Antara) - The government, through state-owned oil and gas company Pertamina, resolved to take over the Mahakam oil block in East Kalimantan after French company PT Total E&P Indonesie ends its contract in 2017.
        "The government's plan is clear: it will give the Mahakam block to Pertamina," Widhyawan Prawiraatmadja, the head of the Performance Control Unit of the Ministry of Energy and Mineral Resources (ESDM), has stated.
         Some quarters have raised doubts about the government's seriousness in taking over the oil block after its exploration by Total E&P for about 50 years.
         Total Exploration and Production (Total E&P) Indonesie had been managing the Mahakam block contract since 1967. In 1997, it was extended for another 20 years, until 2017.
         According to Prawiraatmadja, Pertamina will be able to operate the Mahakam block. "Pertamina will be able to operate it. One should not doubt the ability of his or her own nation," he added.

 
         However, Marwan Batubara, the executive director of the Indonesian Resources Studies, expressed doubts over the government's judgment to entrust Pertamina with the takeover and management of the oil and gas block.
         Some government statements can be construed as its willingness to allow Total E&P Indonesie to maintain its presence in operating the oil and gas rich block.
         "Total and Inpex will continue to do its best to gain participation in the exploitation of the Mahakam Block," Marwan Batubara was quoted as saying by online media RMOL.CO on Monday.
         Total E&P Indonesie has so far been partnering with Japan's Inpex Corporation for exploring the Mahakam oil and gas field.
         It has proposed a five-year transition period for transferring the operation of the block, after the termination of its contract in 2017.
         "It has already been announced that the government will make a decision in the next few weeks. Whatever the decision and its long-term effects, we will ask the government to allow a five-year transition period," President and General Manager of Total E&P Indonesie Hardy Pramono noted on Friday.
         Earlier, Secretary-General of the ESDM Teguh Pamudji stated that the government will make its final decision on the gas block by mid March.
         Marwan Batubara urged that the contract of Total and Inpex should not be extended after it expires in 2017. "Give a chance to Pertamina. It is 100 percent ready to operate it," Batubara noted on his Twitter account.
         He stressed that starting from 2017, the oil and gas reserves in the Mahakam Block can be exploited until 2023. It can continue even beyond that if it is expanded and explored further.
         The rate of return (RoR) of Mahakam Block is still high, reaching 28.6 percent. With a high RoR, it will be easy for Pertamina to find funds for its working capital.
         He pointed out in May last year that after Total's contract expires in 2017, there will still be untapped reserves of 8 trillion cubic feet of gas and 100 million barrels of oil.
         Even after nearly half a century of exploration, the block is believed to hold oil and gas reserves worth Rp1,700 trillion, which can be exploited for another 20 years.
         According to geologist Rovicky Dwi Putrohari, the Mahakam oil and gas block in East Kalimantan still has large oil and gas reserves.
         "As a geologist, I see that oil and gas reserves in the Mahakam block are still large. It still holds a large 'upside potential,' or resembles a field that has yet to be exploited," he revealed.
         Putrohari, who was the general chairman of the Indonesian Geologists Association, also stated that although the Mahakam block has witnessed exploration activities by the French company for some 50 years, its reserves have yet to be optimally tapped.
         Exploration has yet to go deeper to draw oil and gas from reservoirs hidden deep under layers reached so far.
         The technology to go deeper is usually applied in high-pressure and high-temperature systems.
         "Exploration at the Mahakam block has not reached the reservoirs yet. These are deeper and have larger reserves. If it can be reached, I think we will find larger volumes of reserves," he pointed out.
          Along with other oil and gas fields in East Kalimantan, the Mahakam block contributes 25 percent to the national oil and gas revenue, which comes to some Rp100 trillion annually.
         Therefore, the government should take over the Mahakam Block through Pertamina.
         Pertamina has submitted a proposal to take over the Mahakam Block. Prawiraatmadja confirmed that Energy and Mineral Resources Minister Sudirman Said received the proposal on Monday, March 2.
         The government has studied the state-owned company's proposal.
         "The government's plan is clear; it will give the Mahakam block to Pertamina," Prawiraatmadja stated.
         "It will award Pertamina a 30-year contract as the Mahakam block will be given the status of a new block after 2017," Widhyawan Prawiraatmadja observed.
         He remarked that Pertamina can decide whether or not to invite Total to take part in the operations of the block.
         Prawiraatmadja further noted that the option to involve Total could be considered for a swap deal: that Pertamina should get a stake in Total's projects abroad.
         He explained that a contract between Pertamina and Total can be signed in 2015 although it will become effective only after the end of Total's current contract in 2017.
         "That will give Pertamina a long transitional period before taking over the operation of the block from Total," Prawiraatmadja added.
         The Energy and Mineral Resources Minister stated that in order to take over the Mahakam block and operate it for 20 years, Pertamina has prepared US$25.2 billion.
        "The government believes that Pertamina will be able to operate the block," Minister Said noted on Monday (March 9).***3***

(T.A014/INE/s012)


(T.A014/A/A. Abdussalam/A. Abdussalam) 10-03-2015 20:55

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