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View all search resultsUnclear transition policy undermines Rokan block production
The government may repeat the mistake it made that caused production in the Mahakam gas block to decline last year, if it does not develop a clear policy on the operation of the Rokan oil and gas block.
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An offshore platform belonging to Chevron Indonesia operates in local waters. (chevronindonesia.com/-)
T
he government has yet to issue a new contract to transfer the operation of the Rokan block from Chevron Pacific Indonesia (Chevron Indonesia) to state-owned energy holding company Pertamina, which it had promised to issue in January.
The government appointed Pertamina last year to take over the Rokan block's operation when Chevron Indonesia's contract terminates in 2021, but the delay in the new contract has caused uncertainty as to which company is responsible for providing investment during the transitional period.
Chevron Indonesia, a subsidiary of the American energy company Chevron Corporation and the block's current operator, is unlikely to inject large funds in the block two years before its operating contract terminates. Chevron has been operating the Rokan block for more than 50 years.
Meanwhile, Pertamina is likely unable to make any investment until it formally secures the block's operating contract.
Oil and Gas Regulatory Task Force (SKK Migas) chairman Dwi Soetjipto recently said that he intended to resolve the issue no later than this year.
“Yes, the talks between Pertamina and Chevron are deadlocked. It must be decided soon, because Pertamina is expected to start drilling [the Rokan block] in August,” he said.
A similar case occurred with the gas-rich Mahakam Block in East Kalimantan. Pertamina was appointed in April 2015 to take over the block from its operating partners, French subsidiary Total E&P Indonesie (TEPI) and Japan’s Inpex Corporation. However, production in the block fell significantly during the transition period, due to the lack of a clear regulation on which company or companies were responsible for investing in the block until its operation was formally transferred.
