S

tate oil and gas firm PT Pertamina, the operator of the West Madura offshore oil and gas block in East Java, will likely allow regional administrations in East Java to take part in the operation of the oil block, the company says.

Pertamina president director Karen Agustiawan said that the state oil and gas company had opened an opportunity for local authorities to join the ownership of the oil block. But, the final decision on the ownership sharing would be made after discussing the local governments’ proposals with Pertamina’s partner Korean company oil company Kodeco Energy, she added.

“We’ll talk to our partner during the process of formulating the joint operation agreement [JOA] to give the opportunity for regional governments to get involved,” she told reporters after a hearing session with House of Representatives Commission VII overseeing energy and environment.

The company’s spokesperson, Mochamad Harun, revealed that the model of how regional governments would get involved in the operation of the West Madura block would refer to what the company had achieved at the Cepu block, Central Java.

In Cepu, four regional enterprises — PT Petrogas Jatim Utama Cendana and PT Asri Dharma Sejahtera from East Java and PT Sarana Patra Hulu Cepu and PT Blora Patragas Hulu from Central Java — were allowed to acquire a 10 percent interest in the block.

“According to the law, the maximum share that can be owned by regional governments is 10 percent,” Harun said.

The 2004 government decree on upstream oil and gas activities stipulates that production sharing contract (PSC) holders at an oil and gas block are obliged to offer 10 percent of participating interest to regional enterprises.

In the hearing session, Commission VII members urged Pertamina to give the 10 percent stake to regional enterprises.

Harun claimed that the East Java government had been very cooperative in perceiving the issue of participating interest for regional enterprises, saying that all negotiations had run smoothly.

Currently, Pertamina holds an 80 percent stake in the block, and Kodeco Energy owns the remaining 20 percent stake.

Pertamina announced earlier that it was ready to set aside US$1 billion for five years to finance the development of the West Madura block.

The firm also promised it would increase the block’s output from the current 13,400 barrels per day to 25,800 bpd in 2012, 32,500 bpd in 2013, 37,200 bpd in 2014 and 40,500 bpd in 2015.

Harun reported that the company had successfully increased the block’s output to around 14,000 bpd from only 13,400 bpd when it was still operated by Kodeco.

To strengthen Pertamina’s investment capital, the company raised US$1.5 billion from the issuance of global bonds to international investors in New York, the United States, last week.

Pertamina booked Rp 15.82 trillion in net profits in 2010, up 5 percent from Rp 15.07 trillion in 2009.