Jakarta,
April 16 (Antara) - State-owned oil and gas company Pertamina, which
has officially been appointed to take over oil rich Mahakam Block in
East Kalimantan, is optimistic that the management transition will run
smoothly.
Pertamina
Upstream Director Syamsu Alam said on Thursday that the government has
issued an official letter appointing Pertamina to manage the Mahakam
Block after the contract of the current operator, Total Exploration and
Production (Total E&P) Indonesie, expires in 2017.
According
to Alam, Pertamina received the letter from Energy and Mineral
Resources Minister Sudirman Said on Tuesday night. Pertamina will take
over the gas block from Total E&P Indonesie after the French oil
giant ends its contract.
Pertamina will now discuss at length the transition period with Total
E&P Indonesie, Syamsu Alam added. Alam is optimistic the transition
of the management of the oil block from Total E&P Indonesie and
Inpex Corporation will run smoothly as his company already has
experience in that field.
"We
are confident that we have the ability because we already have
experience in Offshore North-West Java (ONWJ) and West Madura Offshore
(WMO) working areas," Sysmsu Alam told a seminar on efforts to safeguard
oil and gas natural resources in Indonesia on Monday.
Syamsu Alam shared the experience transitioning from British Petroleum
(BP) to Offshore North-West Java Pertamina Hulu Energy (PHE ONJW). He
observed the transitional period was adequate as it enabled the company
to maintain, and even increase, production.
"We could even double production," he noted.
He pointed out another case of the transition of WMO Block's operation
from Kodeco to PHE WMO that did not face any hurdle but saw a drop in
production. He added the drop in production was because the transition
was carried out just one day before the contract expired.
"For this WMO, we needed two years of transitional period to increase production," he added.
Syamsu Alam acknowledged that the management of the Mahakam Block has
huge financial and technological responsibilities. Therefore, a longer
transition period will be better to maintain the productivity of the oil
field.
"The longer the transition period the better it is. So, we will use the
two-and-a-half year transition period as well as possible. We will also
utilize this time to discuss with other regions and partners their
interest in participating," he remarked.
According to Widhyawan Prawiraatmadja, the head of the Working Control
Unit of the Energy and Mineral Resources Ministry (ESDM), four years is
ideal for an oil block management transitional period.
"The
ideal transitional period is four years. But, for the Mahakam Block,
which has a two-and-a-half year transitional period, the transition of
the management will be done as well as possible by involving existing
operators. This way we hope there will not be any significant drop in
production," Prawiraatmdja explained.
Pertamina
has expressed its preparedness to begin the transition in 2016-2017 and
invest its capital by procuring a number of equipment and services.
With this plan, it is expected that Pertmina will be ready to become the
operator of the Mahakam Block by January 2018.
Energy
and Mineral Resources Minister Sudirman Said stated earlier that proper
transitional period will be needed to enable Pertamina to efficiently
manage the Mahakam Block from 2017.
Minister Said expressed hope that Pertamina and Total E&P Indonesie
would soon sign a head of agreement regarding the transitional period
for the operatorship of the block.
The government expects the transition period to be for two years, from January 1, 2016, to December 31, 2017.
The Indonesian unit of the French oil and gas giant as the operator of
the block has a 50 percent stake, with Japan's Inpex Corporation holding
the remaining 50 percent.
Total E&P Indonesie will end its contract after operating the
block, one of the country's largest gas reserves, for 50 years. The
block produces gas equivalent to around 280,000 barrels of oil per day.
Meanwhile, Executive Director of the Indonesian Resource Studies Marwan
Batubara appreciated the government's decision to allow state oil and
gas company PT Pertamina to manage the Mahakam Block from 2018.
"I have high appreciation for Minister of Energy and Mineral Resources
Sudirman Said who officially declared that Pertamina will manage the
Mahakam Block from January 1, 2018," Batubara said in a written
statement.
He noted recently 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 of the 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.
Total E&P Indonesie had been managing the Mahakam block contract
since 1967. In 1997, it was extended for another 20 years, until 2017.
Total E&P Indonesie has been partnering with Japan's Inpex
Corporation for exploring the Mahakam oil and gas field.
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 explained.
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 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.***3***
(T.A014/INE)
EDITED BY INE
(T.A014/A/BESSR/A. Abdussalam) 16-04-2015 20:28 |
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