Pertamina ‘ready for Mahakam’
State-owned oil and gas company Pertamina, the new operator of Mahakam, the country’s largest oil and gas block, is technically and financially ready to operate the oil and gas block after the existing contract ends in 2017, the company’s top executive has said.
“We have no problem in getting financing to support the operation. In the initial stage, for instance, we can access funds from banks and repay the loans in the same year using the revenues we obtain from the block,” Pertamina president director Dwi Soetjipto said on Friday.
He dismissed doubts that have been raised about Pertamina’s ability to operate the country’s largest oil and gas block given the high production targets and sizable operational costs.
The block, located offshore East Kalimantan, is the major supplier for one of the world’s largest liquefied natural gas (LNG) plants, the nearby Bontang plant.
At present it generates around 1.6 billion cubic feet per day (bcfpd) of gas, or nearly 25 percent of the total national gas output, in addition to 62,000 barrels of oil per day. To keep annual production of the gas block at the current level, Pertamina will have to spend up to US$2.5 billion each year, according to Dwi.
He also welcomed the government’s decision to give existing operators French oil giant Total SA and its partner Japanese oil company Inpex Corp. a 30 percent stake after the block is formally handed over to Pertamina in 2018.
Dwi said that the involvement of Total and Inpex in the future operation of the Mahakam block would ensure the continuity of the production activities.
Total, along with Inpex, has been operating Mahakam since 1967 and both oil giants now control a 50 percent participating interest each in the current contract.
In addition, existing workers in Mahakam Block would also be transferred to Pertamina, therefore human resources would not be an issue, Dwi added.
Energy and Mineral Resources Minister Sudirman Said officially announced on Friday that Pertamina and local governments would have a 70 percent interest in the Mahakam block under the new contract, which would take effect in early 2018, while existing operators Total and Inpex would have the remaining 30 percent. The exact proportion of the stakes to be given to the provincial and regency administrations in East Kalimantan have not yet been fully disclosed.
After years of uncertainty, the government named Pertamina in March this year as the operator of the Mahakam gas block when the current contract ends. Due to the huge size of the block, Pertamina asked Total and Inpex to stay on in Mahakam as partners.
According to Sudirman, the government had asked the three companies to discuss openly the transition process that needed to take place before Pertamina took over the operation of the Mahakam block in January 2018.
The minister had earlier said that the decision on the percentage of ownership that must be given to Total and Inpex had to be decided by President Joko “Jokowi” Widodo because Pertamina and the other two companies could not decide among themselves.
The appointment of Pertamina as the operator of the Mahakam block illustrates Indonesia’s aspiration to take a firmer grip on the country’s abundant natural resources amid mounting calls by elements across the nation for greater state control of national resources.
Total declined to make any comment on the decision. “We still have no response on the issue. We’re still discussing it,” Total E&P Indonesie spokesman Kristanto Hartadi told The Jakarta Post.
Energy think tank ReforMiner Institute deputy chairman Komaidi Notonegoro said that while the decision would be unlikely to affect the block’s production target, it would almost certainly make a substantial contribution to state revenues.
“As a state-owned firm, Pertamina will have to pay higher dividends to the state thanks to its income from the block,” he said. - See more at: http://www.thejakartapost.com/news/2015/06/20/pertamina-ready-mahakam.html#sthash.ru2l1Wqr.dpuf
State-owned oil and gas company Pertamina, the new operator of Mahakam, the country’s largest oil and gas block, is technically and financially ready to operate the oil and gas block after the existing contract ends in 2017, the company’s top executive has said.
“We have no problem in getting financing to support the operation. In the initial stage, for instance, we can access funds from banks and repay the loans in the same year using the revenues we obtain from the block,” Pertamina president director Dwi Soetjipto said on Friday.
He dismissed doubts that have been raised about Pertamina’s ability to operate the country’s largest oil and gas block given the high production targets and sizable operational costs.
The block, located offshore East Kalimantan, is the major supplier for one of the world’s largest liquefied natural gas (LNG) plants, the nearby Bontang plant.
At present it generates around 1.6 billion cubic feet per day (bcfpd) of gas, or nearly 25 percent of the total national gas output, in addition to 62,000 barrels of oil per day. To keep annual production of the gas block at the current level, Pertamina will have to spend up to US$2.5 billion each year, according to Dwi.
He also welcomed the government’s decision to give existing operators French oil giant Total SA and its partner Japanese oil company Inpex Corp. a 30 percent stake after the block is formally handed over to Pertamina in 2018.
Dwi said that the involvement of Total and Inpex in the future operation of the Mahakam block would ensure the continuity of the production activities.
Total, along with Inpex, has been operating Mahakam since 1967 and both oil giants now control a 50 percent participating interest each in the current contract.
In addition, existing workers in Mahakam Block would also be transferred to Pertamina, therefore human resources would not be an issue, Dwi added.
Energy and Mineral Resources Minister Sudirman Said officially announced on Friday that Pertamina and local governments would have a 70 percent interest in the Mahakam block under the new contract, which would take effect in early 2018, while existing operators Total and Inpex would have the remaining 30 percent. The exact proportion of the stakes to be given to the provincial and regency administrations in East Kalimantan have not yet been fully disclosed.
After years of uncertainty, the government named Pertamina in March this year as the operator of the Mahakam gas block when the current contract ends. Due to the huge size of the block, Pertamina asked Total and Inpex to stay on in Mahakam as partners.
According to Sudirman, the government had asked the three companies to discuss openly the transition process that needed to take place before Pertamina took over the operation of the Mahakam block in January 2018.
The minister had earlier said that the decision on the percentage of ownership that must be given to Total and Inpex had to be decided by President Joko “Jokowi” Widodo because Pertamina and the other two companies could not decide among themselves.
The appointment of Pertamina as the operator of the Mahakam block illustrates Indonesia’s aspiration to take a firmer grip on the country’s abundant natural resources amid mounting calls by elements across the nation for greater state control of national resources.
Total declined to make any comment on the decision. “We still have no response on the issue. We’re still discussing it,” Total E&P Indonesie spokesman Kristanto Hartadi told The Jakarta Post.
Energy think tank ReforMiner Institute deputy chairman Komaidi Notonegoro said that while the decision would be unlikely to affect the block’s production target, it would almost certainly make a substantial contribution to state revenues.
“As a state-owned firm, Pertamina will have to pay higher dividends to the state thanks to its income from the block,” he said. - See more at: http://www.thejakartapost.com/news/2015/06/20/pertamina-ready-mahakam.html#sthash.ru2l1Wqr.dpuf
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