State oil and gas firm PT Pertamina has asked the government to allow it to become an operator of the West Madura block in East Java after the current contract ends in May this year.

Pertamina vice president for corporate communications Muchamad Harun said in Jakarta last week that the company’s board of directors appreciated the government’s plan to increase its stake by another 10 percent to 60 percent in the oil and gas block in the new contract.

However, he said it was important for the state oil and gas company to become the operator of the oil and gas block.

“It’s not really important for us whether we have a 100 percent or 60 percent stake in the block. We want to be the operator because we’re the biggest shareholder,” he said via telephone.

He added that Pertamina had prepared a blueprint on how to develop the oil block and optimize production to between 26,000 and 30,000 barrels of oil per day (bpd) from the current 14,000 bpd.

“By becoming the operator, we would have more freedom to develop the block. We already have a concept on how to crank up production,” Harun said.

A report from Reuters revealed that the Energy and Mineral Resources Ministry said the government would allow Pertamina to increase its ownership in the West Madura block to 60 percent.

Currently, Pertamina owns a 50 percent stake in the block with the remaining 50 percent jointly owned by South Korean-based Kodeco Energy and China-based CNOOC with a 25 percent stake each. The Korean company is the current operator of the block.

The ministry promised earlier that the fate of the West Madura block would be decided by March 31 this year at the latest. However no official decision has been made on the matter as of today.

The chairman of Indonesian Resources Studies (Iress), Marwan Batubara, said the West Madura block should be handed over to Pertamina when the contract expired. He said his organization would not stand by and allow the state company to become a “loser in its own country”.

“Current regulations state that Pertamina has the privilege to take over an oil and gas block from production sharing contract [PSC] holders when the contract ends,” he said in a press statement.

Pertmina had filed a request to the government to take over the West Madura block two years ago, but as of today, the government has not responded to the request, he continued.

If the government went ahead with its plan to increase Pertamina’s stake in the block to 60 percent, Marwan said the remaining 40 percent stake should be auctioned through an open bidding process.

Iress claimed the government supported “foreign entities’ interest” in the way it dealt with the future of the block.

Pertamina officials are confident the firm will become the operator of the block, another step in its ambitious target of producing 1 million bpd.

Pertamina said that in 2010, the firm produced 190,000 bpd, an increase of 2 percent from 186,000 in 2009. The company said earlier it was confident its oil production would top 208,000 barrels per day in 2011.

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