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Government settles on four blocks, three in the pipeline
In an apparent move to rebuild confidence among contractors and provide certainty in the oil and gas sector, the Energy and Mineral Resources Ministry announced on Friday its decision on the contracts of four blocks and is looking to rule on more working areas in the near future
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n an apparent move to rebuild confidence among contractors and provide certainty in the oil and gas sector, the Energy and Mineral Resources Ministry announced on Friday its decision on the contracts of four blocks and is looking to rule on more working areas in the near future.
The four blocks are Pase block in Aceh, Kampar block in Riau, Gebang block in North Sumatra and Offshore North West Java (ONWJ) block in West Java.
Energy and Mineral Resources Minister Sudirman Said said his ministry had decided that Pase block's management would be handled by the local administration owned company PT Perusahaan Daerah Pembangunan Aceh (PDPA).
'The company held a beauty pageant to look for a partner to manage the block. It has chosen Triangle Pase, the previous operator,' Sudirman said.
Pase block's contract of work expired in 2012. The previous government terminated Triangle Pase's contract in the block, however, the company was appointed as a temporary operator for six months, an assignment that has been extended several times.
Pase block started its operations in 1981, under Mobil Pase Inc., a subsidiary of the US-based Exxon Mobil. As gas reserves depleted, ExxonMobil shut down its operations in 2006 and finally sold its stake in the block to Triangle Pase in 2009.
Meanwhile, another block, Kampar, will be given to state-owned oil and gas giant Pertamina, according to the ministry's performance controlling unit head, Widhyawan Prawiraatmaja. The contract for Kampar block, which was under the operatorship of PT Medco E&P Indonesia, expired last year. However, Medco was also appointed to temporarily manage the block for six months, an assignment that also has been extended.
'The Kampar working area will be given to Pertamina with a transition period of until December 2015. We hope Pertamina includes Medco and the local administration's firm in the ownership of the block,' Widhyawan said.
As for Gebang block, the ministry appointed current shareholder PT Energi Mega Persada (EMP) as the operator of the block. Gebang is currently under a joint operation body between Pertamina and EMP. The contract for Gebang will expire in November 2015.
Regarding ONWJ block, the ministry has extended the working area contract. ONWJ is currently owned by Pertamina ' which serves as the operator ', EMP and Kufpec. ONWJ block's contract is due in January 2017.
'We will extend the contract, however, we are asking that Pertamina gets a higher stake in the block,' Widhyawan said.
Pertamina, through its subsidiary, PHE ONWJ, currently holds a 58.3 percent stake in the block. Meanwhile, Energi Mega Persada ONWJ Ltd. ' a subsidiary of EMP ' holds 36.7 percent and Kufpec 5 percent.
The decisions on the blocks are part of the ministry's attempts to settle pending matters in the institution. There are currently 28 oil and gas blocks whose contracts will expire starting next year to 2021. Under current regulation, contractors are allowed to submit proposals for extensions 10 years before the blocks' expiry dates.
Widhyawan said that apart from the four blocks that have been decided, there were currently only three proposals regarding the Mahakam, Lematang and Makassar Strait blocks. He said the ministry would decide on the three blocks soon.
The ministry has called for contractors whose blocks are due in the next five years to submit their proposals.
