Indonesia ends uncertainty over Mahakam; Pertamina to take over from Total Platts Commodity News 3/13/2015 Copyright 2014. Platts. All Rights Reserved.
Jakarta (Platts)--13Mar2015/247 am EDT/647 GMT The Indonesian government has decided to hand over the giant, but aging Mahakam gas block to state-owned Pertamina after the block's current contract with French major Total and Japan's Inpex ends in 2017, a senior government official said Friday. This puts an end to years of uncertainty and debate over Mahakam's fate post-2017. The block, which was discovered in 1972 offshore East Kalimantan, has been a key gas supplier to the Bontang LNG plant. It had 1.68 billion barrels of liquids and 21.2 Tcf of gas when it was discovered, and Total and Inpex have so far exploited around 80% of the reserves. Current production is at 1.65 Bcf/d of gas and a little over 60,000 b/d of liquids. The finer details of how best to transition operatorship from Total to Pertamina will have to be worked out, but the government has decided to hand over full control of the block to Pertamina, Widhyawan Prawiraatmadja, head of the Performance Control Unit at the energy ministry said. "We hand it over 100% to Pertamina. It is up to Pertamina whether it is to be the single shareholder or it will need partner," Antara news agency quoted Widhyawan as saying. PERTAMINA OPTIMISTIC Pertamina, meanwhile, is optimistic that it will be able to maintain gas production at the block at 1.5 Bcf/d, after it takes over the block from Total and Inpex. Pertamina intends to carry out some development programs at the block that should be able to offset production decline, the company's upstream director Syamsu Alam told Platts Thursday. "Mahakam has been producing for a long time, but based on our evaluation, it still has huge remaining reserves [that can be] developed," Alam added. Under a proposal made to the government earlier this month, Pertamina is planning to invest $25.2 billion over 20 years on the block and is willing to cooperate with the existing operators, Prawiraatmadja told Platts on Tuesday. The government has told Pertamina to start preparations to take over the block as soon as possible to ensure that there is no production disruption, Prawiraatmadja said. Total and Inpex have been spending about $2.4-$2.5 billion per year to develop and arrest production decline at the block, Platts has reported. Alam said that Pertamina will be ready to spend what is required. "We have made a financial strategy to develop Mahakam and we expect it will not disappoint stakeholders. Principally, we will adjust the investment figure with our working program in a bid to avoid production decline. If in fact Mahakam needs a huge amount of investment, Pertamina is ready," he said. ONGOING PROJECTS Total earlier said that the block is now estimated to contain 2.7-3 Tcf of proven gas reserves, and this is expected to dwindle to 1.3-1.6 Tcf in 2018 due to natural depletion, Platts has reported. Total and Inpex have launched work on several development projects in and around the Mahakam block to maintain production levels. These include adding three new platforms with a combined processing capacity of 500,000 Mcf/d at the Sisi-Nubi and Peciko fields; Sisi Nubi Phase 2B project, which is expected to start producing 350,000 Mcf/d of gas before 2017; and the South Mahakam 3 project, which includes the Jempang and Metulang fields and is expected to be completed in 2015 and will add 250,000 Mcf/d of capacity to the block. Mriganka Jaipuriyar, mriganka.jaipuri...@platts.com Anita Nugraha, newsd...@platts.com Edited by Geetha Narayanasamy, geetha.narayanas...@platts.com Regards /Puji ______________________________ Sent wirelessly from mobile device. ---------------------------------------------------- EKSKURSI 200 TAHUN ERUPSI TAMBORA & 55 TAHUN IAGI Bima, NTB tanggal 11-14 April 2015 http://www.iagi.or.id/event/200-years-of-tambora-eruption-iagi-55th-anniversary Registrasi: Email : sekretariatm...@gmail.com Telp : 085262076783 (Enrico Aritonang) ---------------------------------------------------- Visit IAGI Website: http://iagi.or.id Hubungi Kami: http://www.iagi.or.id/contact ---------------------------------------------------- Iuran tahunan Rp.250.000,- (profesional) dan Rp.100.000,- (mahasiswa) Pembayaran iuran anggota ditujukan ke: Bank Mandiri Cab. Wisma Alia Jakarta No. Rek: 123 0085005314 Atas nama: Ikatan Ahli Geologi Indonesia (IAGI) Bank BCA KCP. 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