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pstream oil and gas regulator BPMigas says it will back East Kalimantan provincial administration’s plans to take part in the operation of the gas-rich Mahakam Block in Kutai Kartanegara regency.

BPMigas spokesman Gde Pradnyana said on Thursday that the move was in line with BPMigas’ stance to provide opportunities to provincial administrations to hold participating interests in new oil and gas projects in their territories.

“BPMigas supports the interests of local administrations to enter such new projects, especially those in the production stage,” Gde told The Jakarta Post over the telephone.

He added that participation in production was less risky than costlier exploration.

Gde said that the agency expected the East Kalimantan provincial administration would ensure its participating interest would accord with its financial means.

“By doing so, the administration can gain maximum benefits from the project,” he said, adding that it also expected East Kalimantan to maintain its possible participating interests in the block instead of selling them.

So far, Gde said, he was unaware of the size of the stake that East Kalimantan wanted to acquire.

Meanwhile, BPMigas head R. Priyono said on the agency’s website that the provincial administration could create synergies with local banks to obtain funding and create multiplier effects.

The Mahakam Block, operated by Total E&P Indonesie since 1967, is comprised of several fields, including Tunu, Tambora, Peciko, Sisi and Nubi, and produces 2.5 billion standard cubic feet of gas a day, most of which is exported to Japan, and 9,300 barrels of oil and condensate a day.

Total, which produces 30 percent of Indonesia’s gas, has been collaborating with Inpex to develop the block and was expected to invest in the area US$16.5 billion by 2017, after which it would spend another $7 billion to maintain production, the firm stated recently.

State-owned oil and gas company PT Pertamina previously expressed an interest in taking over the rights to operate the block before 2017 when Total’s contract expires.

Pertamina is reportedly eyeing a 15 to 25 percent stake in the block and expects to hold a majority of shares in the block after 2017.