T

he government has decided not to extend PT Chevron Pacific Indonesia'€™s contract to operate the Siak block in Riau, Sumatra, ending months of uncertainty over the future of the oil-rich field.

In a ministerial letter signed on Nov. 27, Energy and Mineral Resources Minister Jero Wacik appointed state-owned oil and gas company PT Pertamina to take over the block.

'€œIn order to maintain the operation and production [of the Siak block], Chevron Pacific Indonesia is asked to manage the block temporarily for six months or until the signing of a new contract between the SKKMigas and Pertamina,'€ Jero said in the letter, referring to the Upstream Oil And Gas Regulatory Special Task Force.

'€œDuring the temporary operatorship, Pertamina and Chevron have to complete all things related to the transfer of data, assets, human resources, etc,'€ Jero added.

The Siak block produces around 2,000 barrels per day (bpd) of crude oil, which is about 0.6 percent of Chevron'€™s total average production. The block is among 29 oil and gas contracts that expire between 2013 and 2021.

SKKMigas spokesperson Elan Biantoro said the agency would comply with the ministry'€™s ruling.

'€œCoordination will be conducted immediately with all relevant parties so that production won'€™t be disrupted,'€ Elan said.

Meanwhile, Chevron said it was not pleased about the decision.

'€œWhile Chevron Pacific Indonesia is disappointed that the production sharing contract [PSC] for the Siak block will not be extended, the company respects the decision. Chevron Pacific Indonesia is committed to ensuring a safe and efficient transition as the interim operator of the Siak block,'€ Chevron Indonesia corporate communication manager Dony Indrawan said.

Aside from the Siak block, the government '€” in another ministerial letter '€” also terminated the operatorship of PT Medco E&P Indonesia in the Kampar block, also in Riau, starting Thursday.

The Kampar block was awarded to PT Stanvac Indonesia in a contract that was signed on July 5, 1993. PT Stanvac was acquired in 1995 by PT Exspan Nusantara, which was later renamed PT Medco E&P Indonesia. The contract for the operatorship of Kampar became effective on Nov. 28 1993 for 20 years, meaning it expired on Thursday.

'€œIn an attempt to maintain the production of the Kampar block, Medco E&P Indonesia is asked to temporarily manage the area for six months or until the appointment of a definitive operator,'€ the letter said.

Responding to the government decision, Imron Gozali, the corporate secretary of Jakarta listed PT Medco Energi Internasional '€” the parent company of Medco E&P '€” said the Kampar block could be put up for auction considering that the block was now an open area.

'€œWhen it is put up for auction, we will take part. We see Kampar as attractive given that its production is around 1,600 to 1,700 barrels per day,'€ Imron said.