Indonesia state owned energy firm PT Pertamina will take over Mahakam Natural Gas Block Offshore project from French Total E&P Indonesie and Japan’s Inpex Corp. The Mahakam block is the main source of gas for Indonesia’s Bontang liquefied natural gas (LNG) plant in East Kalimantan.
Pertamina will take over a majority stake in the block, starting January 1, 2018. The work contract of Total E&P and Inpex will end by December 31, 2017.
The memorandum of understanding (MoU) between three parties was signed on Wednesday in the presence of Energy & Resources Minerals Minister Sudirman Said, Chaiman of Special Task Force for Upstream Oil & Gas Activities (SKK Migas) Amin Sunaryadi, CEO of Pertamina Dwi Soetjipto, Senior Vice President (SVP) Inpex for Asia & Australia Kenji Kawano and SVP Total E&P for Asia Pacific Olivier de Langavant.
The minister said, under the new agreement, Pertamina will own 60 per cent participant interest in Mahakam blocks, Total E&P and Inpex will have a 15 per cent share while East Kalimantan regional province will own 10 per cent.
The three parties will now sign Production Contract Sharing (PSC) before end of 2016. Sudirman said, during the transition period till 2017, the investment of the projects will continue to come from Total E&P and Inpex.
According to Dwi Sutjipto, currently the project needs investment up to $2.5 billion per year to produce 60,000 barrel oil a day and 1,76 billion cubic feed per day gas.
He said, the acquisition of Mahakam Block will have a positive impact on Pertamina especially in terms of revenue.
Indonesia is one of the world’s top five LNG shippers, although its exports have been declining in recent years.