JAKARTA. After securing managing rights to the valuable Mahakam block, state-owned Pertamina will ask the government to grant the company stewardship of other expiring blocks, says the company’s top executive.

Pertamina president director Dwi Soetjipto said his company would make the request in the near future, and that the move was part of the firm’s attempt to boost its share of national oil and gas production.

“We will try to obtain and operate big blocks. We also seek small blocks. However, we will likely put them under a KSO scheme with national private firms,” Dwi told The Jakarta Post.

Dwi was referring to a cooperation known locally as Kerja Sama Operasi, in which Pertamina owns a block but hands over management to a partner company.

There are currently 32 oil and gas blocks set to expire by 2024 accounting for 72.5 percent of the country’s current oil and gas output, according to data from the Upstream Oil and Gas Regulatory Task Force (SKKMigas).

The Energy and Mineral Resources Ministry recently decided on the fate of four expiring blocks, including Mahakam. It said that Pertamina takeover in 2018, replacing the existing operator, Total E&P Indonesie.

Discussions have continued between Pertamina and Total, Dwi said, regarding a transition period for handing over operatorship. Such a transition period will need to be rolled out next year at the latest, he said, so that the changes would not disturb production.

The participation of the existing operator in the block is also being discussed, he added.

“Our team will continue to evaluate what will be needed once the contracts expire, how much risk Pertamina will assume if it wants to hold 100 percent [ownership] of the block, or what percentage of participation to give to existing operators to ensure a smooth process,” Dwi said.

Under the current production sharing contract (PSC), Total holds 50 percent of the block and Japanese Inpex holds the other 50 percent.

In a recent meeting with the government, CEO of Total SA, the parent firm of Total E&P Indonesie, Patrick Pouyanne, said his company remained committed to investing in Indonesia, and was ready to cooperate with the national oil company.

“Total is committed to Indonesia. I am very happy that the President confirmed his willingness for Total to continue in Mahakam. We are willing to work with Pertamina for the future of the Mahakam field,” he said.

Despite operating numerous oil and gas blocks in the country, Pertamina’s production accounts for just 23 percent of national oil and gas output, lower than other state oil and gas firms around the world.

Pertamina has eyed boosting its share to 50 percent by taking over management of expiring blocks. 

Under newly released regulations, Pertamina can be a partner in the operation of a block by holding a participating interest of no more than 15 percent. This rule will be applied if the government decides to extend a contract for an existing operator and turns down a proposal by Pertamina to take over the operatorship of the same block. (Raras Cahyafitri)

Editor: Uji Agung Santosa