East Kalimantan Govt Formally Takes a 10% Stake in Offshore Mahakam Block

Indonesia's Ministry of Energy and Mineral Resources (MEMR) formally handed over a 10 percent participating interest (PI) in the Mahakam Block, currently operated by France's Total S.A. in a joint venture with Japan's Inpex Corp., in offshore East Kalimantan to the province's Governor Tuesday, the ministry announced on its website.

East Kalimantan Governor Awang Ishak Faroek received the document for the stake in the Mahakam Block from MEMR's Director General of Oil and Gas I Gusti Nyoman Wiratmaja Puja in a ceremony in Balikpapan.

“(The) PI is our hope to be able to participate in managing our natural resources,” Awang Faroek commented as East Kalimantan has long wanted to own an interest in the gas asset upon expiry of the present production sharing contract (PSC) at the end of 2017.

The ministry revealed that the grant of the participating interest in the Mahakam Block is in accord with MEMR Regulation No.15/2015 on the Management of Oil and Gas Work Area. The regulation states that region-owned enterprise (BUMD) can take a maximum 10 percent stake upon the expiry of the contract for an oil and gas block. The MEMR indicated that the funds generated from such blocks will be used by the regional government for development purposes.

The Indonesian government had earlier decided to grant a 30 percent interest in the Mahakam Block to Total and Inpex, while state-owned PT Pertamina -- who will hold a 60 percent stake in the acreage -- will take over as operator from the French oil major in January 2018.

Pertamina CEO Dwi Soetjipto said June 19 in a Reuters report that the company is likely to invest $2.5 billion a year on Mahakam when it assumed operatorship of the offshore gas block.

Separately, the MEMR reported Friday that Minister for Energy and Mineral Resources Sudirman Said has received an offer from the Director of the International Energy Agency (IEA) Fatih Birol during the G20 Energy Ministers Meeting in Istanbul, Turkey, for Indonesia to become an associate member of the Paris-based agency.

Apart from Indonesia, China, India, South Africa, and Russia are the other associate members that will participate at the next IEA meeting in Paris in November, Sudirman added.


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