Pertamina Can Opt for Up to 15% Stake in Expiring PSCs in Indonesia
Indonesia's national oil company (NOC) PT Pertamina has an option to acquire up to 15 percent of expiring oil and gas blocks in the country if existing operators of production sharing contracts (PSC) are granted an extension by the state under new government regulation, local news daily The Jakarta Post reported Wednesday.
"The new regulation says that if a PSC in an oil and gas block is extended, Pertamina has the right to own a maximum 15 percent interest in it," according to the report.
The regulation is intended to support Pertamina’s efforts to boost its share of national oil production within the next five years by taking over the operation of expiring petroleum blocks.
In addition, the government set a deadline for Pertamina to submit a proposal to assume operations of expiring blocks from existing operators under the regulation.
Should the current operators propose extension for blocks with more than three years prior to PSC expiry, the NOC has to submit an operational plan within a year. Meanwhile for PSCs that expire within three years, Pertamina has to submit its plans of operatorship for these blocks within six months of the extension proposals filed with the government by existing operators.
Data from Indonesia's upstream regulator SKKMigas indicated that 32 oil and gas blocks are due to expire between now and 2024, with these blocks accounting for 72.5 percent of the country’s current oil and gas output. Given the the size of this production, there are rising concerns over the status of the expiring blocks, The Jakarta Post said.
In the meantime, negotiations between Pertamina and France's Total S.A. -- operator of the Mahakam PSC -- to sign an agreement to transit the operatorship of the East Kalimantan gas block are expected to be completed by the end of this month, I Gusti Nyoman Wiratmaja Puja, acting director general for Oil & Gas at Indonesia's Ministry of Energy and Mineral Resources (MEMR) told Rigzone May 4.
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