W

ith the concession for the Siak oil block in Riau, due to expire in November this year, the local administration is seeking to take over the block from Chevron Pacific Indonesia.

Riau Economy Agency chief Irhas Irfan told The Jakarta Post on Tuesday that the Riau provincial administration had expressed an interest in managing the 2,480-square kilometer block that spans the four Riau regencies of Kampar, Rokan Hulu, Rokan Hilir and Bengkalis.

Currently, the block, which is operated by the Indonesian subsidiary of US-based energy giant Chevron, produces around 2,000 barrels of crude oil per day (bpd).

“The Siak contract will expire on Nov. 27 this year. This is a chance for us [to play a role and] not be a spectator in our own land,” he said in Pekanbaru, Riau on Tuesday.

Because the operational area of the block crossed regencies the Riau provincial administration was looking to get the first chance to develop the block after the concession expires, according to Irhas.

The Riau administration had submitted their proposal to take over the Siak block to the oil and gas directorate general at the Energy and Mineral Resources Ministry in Jakarta, said Irhas, adding that the administration would appoint PT Riau Petroleum, a province-owned company, as Siak block operator.

Previously, Riau administration-owned company PT Bumi Siak Pusako, has developed the Coastal Plain block in the province with state-owned oil and gas firm PT Pertamina Hulu, while another Riau-owned company PT Sarana Pembangunan Riau, is the sole operator for the Langgak block in the region.

“Both province-owned companies have shown their capabilities in handling the blocks previously operated by Chevron,” Irhas said.

He declined to reveal the funds the Riau administration has allocated to develop the Siak block, insisting they would focus on the takeover plan first.

The Siak block is among the 29 concessions due to expire between 2013 and 2021. Other blocks include Mahakam in East Kalimantan, operated by France-based Total E&P Indonesia, which will expire in 2017; Salawati, operated by Intermega Sabaku and due to expire in 2015; Corridor, operated by ConocoPhillips Indonesia, expiring in 2016; Kepala Burung, operated by PetroChina, which will expire in 2016; and Arun B, operated by ExxonMobil, due to expire in 2017.

In Jakarta, the Energy and Mineral Resources Ministry’s secretary to the directorate general of oil and gas affairs, Edy Hermantoro, said the government would evaluate all options for the future of the Siak block.

“We are still reviewing the outlook for the block. Chevron, provincial-owned companies or other firms may have the technology to maximize the potential reserves of the block,” he said at the ministry’s headquarters on Tuesday.

Edy, who is also the acting oil and gas director general, did not reveal the hydrocarbon reserves or the peak production level of the block, but said that the basins could contribute around 1,600 to 2,000 bpd to the nation’s output.

Meanwhile, Chevron Pacific Indonesia’s spokesman Dony Indrawan said separately that the firm would expect the government to extend their contract for the Siak block. “We sent a letter of intent to the government in September 2010. The kick-off meeting with BPMigas [the now-defunct upstream oil and gas regulator body, replaced by task force SKMigas] took place on Jan. 11 2011,” he said.

When asked whether Chevron would be keen to work together with Riau’s locally owned companies to develop the Siak block in the future, the spokesman said that the firm would assess and evaluate all available options.

The Siak block oil output equals 0.6 percent of Chevron’s total average production of 330,000 bpd. Chevron, which owns several huge oil and gas blocks in Indonesia including in Duri, Riau, contributes 40 percent of Indonesia’s oil output.