State oil and gas company PT Pertamina may not be able to acquire a stake in the gas-rich Mahakam block in East Kalimantan as early as it would like because overseas gas buyers have demanded the block’s current stakeholders be allowed to continue operating there until 2017.
France’s Total S.A. operates the block with a 50 percent share, in partnership with Japan’s Inpex, which controls the other 50 percent.
The contract will expire in 2017, but Pertamina is seeking to begin its own operations at the block sooner.
Most of liquefied natural gas (LNG) produced from the block is exported to Japanese companies, including Kansai Electric Power, Chubu Electric Power, Kyushu Electric Power, Osaka Gas, and Toho Gas. These buyers are referred to in Indonesia as western buyers.
The LNG sales contract with the Japanese buyers expired last March.
However, the contract has since been extended with the buyers requiring the current ownership to be maintained until the block contract expires, upstream oil and gas regulator BPMigas’s deputy of financial, economic, and marketing Wibowo S. Wirjawan said Thursday.
“They [the buyers] demanded our commitment to support Total’s operation [in the block] until 2017 and we have delivered this commitment,” Wirjawan said.
He said that there would be no stakeholders changes at the block until 2017.
“After 2017, it’s up to the government to decide,” Wirjawan added.
Pertamina’s president director Karen Agustiawan said earlier that Pertamina expected to acquire up to 25 percent of Total’s stake in the block in the first half of this year.
“We have submitted two options to the government and expect the decision to be made by April. We want to get into the block as soon as possible, preferably within the first half of this year.” Karen said on March 18.
Energy and Mineral Resources Minister Darwin Zahedy Saleh voiced support for Pertamina’s plan to acquire the block.
“We want Pertamina to acquire part of the block’s stake before the contract expires in 2017,” he said.
Pertamina’s spokesman Basuki Trikora Putra said Pertamina still expected to farm into the block as soon as possible.
“The sooner the better for us. We expect all elements to support us in this,” he said.
The Mahakam block has estimated gas reserves of 11 trillion cubic feet. In September last year, Total E&P Indonesie, the local unit of Total, told legislators that natural gas production at the block would decline slightly to 2.55 billion standard cubic feet per day in 2009 from 2.57 billion in 2008.
Output is expected to decline to 2.38 billion in 2010.
The block currently supplies 80 percent of the gas at the Bontang liquefaction plant, which is operated by PT Badak NGL.
The gas from the Mahakam block is also sold to state gas distributor PT Perusahaan Gas Negara (PGN), Pertamina and local fertilizer producer PT Pupuk Kaltim.