The Jakarta Post
The 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.
'In 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.
'During 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.
'Coordination 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.
'While 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.
'In 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.
'When 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.
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