Govt risks losing Mahakam revenue

JAKARTA. The government needs to make a decision on the future of the Mahakam block soon, or it will risk losing revenue amid declining production in the East Kalimantan gas-rich block.

Total E&P Indonesie, the operator of the Mahakam block, needs clarity on the future of its contract to justify investment in the block, says visiting Total E&P Senior Vice President Asia Pacific Jean-Marie Guillermou.

The France-based company, which is responsible for nearly one-third of gas production in the country, will see its current contract expire in 2017. The government, however, has not provided clarity on the future prospects of the contract.

“If a decision is not made now, production will be put at risk. I think the minister is aware of the situation,” Guillermou said, referring to Energy and Mineral Resources Minister Jero Wacik.

Guillermou was in Jakarta on Wednesday to meet with Jero to discuss the future of the Mahakam operatorship.

During their meeting, Total proposed a five-year transitional period after 2017 during which the French company would share expertise with state-owned oil and gas firm PT Pertamina.

It is hoped that after the transition period, Pertamina would have capacity to operate the Mahakam block.

“During the transition period, we can operate [Mahakam block] jointly with Pertamina,” Guillermou told the press after his meeting with Jero.

In his explanation, Guillermou repeatedly praised Pertamina as an oil and gas company with the potential of becoming the operator of the Mahakam block, saying that there was no other company in Indonesia with such experience.

“Pertamina has experience, but it needs to learn [to be the operator of Mahakam block] because Mahakam is very complicated,” he said.

Separately, Deputy Energy and Mineral Resources Minister Susilo Siswoutomo said the government would consider Total’s proposal.

He, however, said there was no exact date set for when the government would announce the decision on the concession, although he guaranteed that the government would avoid repeating the case of the West Madura offshore block, in which the government’s decision to hand the operatorship to Pertamina from South Korea’s Kodeco was made at the last minute.

Meanwhile, upstream watchdog SKKMigas head Rudi Rubiandini said his office would be ready to form a partnership with the new Mahakam contractor be it Pertamina or Total.

Rudi, who once suggested that both Pertamina and Total operate the Mahakam block as a team when he was deputy energy minister, did not respond to The Jakarta Post’s question on what he thought of Guillermou’s proposal.

Separately, Pertamina investment-planning and risk-management director Afdal Bahaudin refused to comment on Mahakam, although he acknowledged that Pertamina would need the transfer of technology from Total before fully becoming the operator of the gas-rich block. (Kurniawan Hari and Amahl S. Azwar)