Rome-based energy company ENI S.p.A has agreed to change its contract in the East Sepinggan block, offshore East Kalimantan, from cost recovery to gross split scheme, the first existing contractors that voluntarily turned its contract into the new scheme.

Deputy Energy and Mineral Resources Minister Arcandra Tahar on Tuesday announced also ENI S.p.A preferred to immediately change the contract, to avoid a long-debate with the government about the cost of its project in Merakes gas field.

“The decision shows that the gross split scheme gives investors simple process, which is certainty more efficient,” he told the press, adding that with the decision, Italian company is required to change its plan of development (POD) for Merakes gas field and to reveal the amount of its investment.

“The company are committed to increase the local content requirement [TKDN] in the project. If the local content level reaches 30 to 50 percent, the company will get a reward in the form of 2 percentage of additional split.”

ENI S.p.A’s contract in East Sepinggan started in July 2012 and would end in 2041. The block’s Merakes gas field is targeted to go onstream in 2021 and set to deliver 391 million standard cubic feet per day (mmscfd) of gas in its peak production.

In East Sepinggan block, ENI S.p.A holds the 85 percent of participating interest (PI) and the remaining stake holds by Pertamina Hulu Energi, the upstream subsidiary of state energy holding company Pertamina. (bbn)