After long-drawn-out negotiations, state-owned energy giant Pertamina is set to take over the costly East Kalimantan and Attaka oil and gas blocks.
The move allows the company to comply with the government’s mandate in early January to acquire eight blocks, the contracts of which will expire this year, despite its mounting financial burden. The blocks are: Tuban, Ogan Komering, Sanga-sanga, Southeast Sumatra, North Sumatra Offshore, Tengah, East Kalimantan and Attaka.
East Kalimantan and Attaka
After carrying out a thorough evaluation on the cost structure and risks of operating these blocks under a new production-sharing contract scheme the gross-split scheme - Pertamina decided to return the East Kalimantan block to the government as the latter considered block abandonment and site restoration costs too high.
Subsequently, the company also had to return the Attaka block as its operation had been merged with that of the East Kalimantan block. However, in a move some might consider unexpected, Pertamina reversed its stance when it expressed its readiness to make sacrifices in running the two blocks.
Energy and Mineral Resources Ministry secretary-general Ego Syahrial told reporters on Thursday evening that the government’s persistent efforts in persuading Pertamina could have been the reason behind the company’s decision to change course.
Subsequently, the company also had to return the Attaka block as its operation had been merged with that of the East Kalimantan block. However, in a move some might consider unexpected, Pertamina reversed its stance when it expressed its readiness to make sacrifices in running the two blocks.
Energy and Mineral Resources Ministry secretary-general Ego Syahrial told reporters on Thursday evening that the government’s persistent efforts in persuading Pertamina could have been the reason behind the company’s decision to change course.
“Pertamina thought it would suffer losses if it only operated the East Kalimantan block. But [we said] the losses would be compensated with returns from other blocks,” he said.
“At last, the company expressed a willingness to take over all of the eight blocks as mandated by the government.”
Ego said the company could use state-of-the-art technology to slash down on considerable block abandonment and site restoration expenses or find partners'to jointly operate the East Kalimantan block.
Separately, Pertamina spokesperson Adiatma Sardjito confirmed that the company was ready to acquire the East Kalimantan and Attaka blocks, saying the decision would not significantly aifect its financial health.
“It is possible. We have made some calculations for it [the acquisition],” he told The Jakarta Post on Friday.
Pertamina’s decision to take over the two blocks comes in the wake of the company’s poor financial performance. Between January and September last year, its net income fell by 29.7 percent year-on-year to US$1.99 billion following the government’s decision to maintain the prices of Premium gasoline and subsidized Solar diesel amid an increase in global crude prices.
“At last, the company expressed a willingness to take over all of the eight blocks as mandated by the government.”
Ego said the company could use state-of-the-art technology to slash down on considerable block abandonment and site restoration expenses or find partners'to jointly operate the East Kalimantan block.
Separately, Pertamina spokesperson Adiatma Sardjito confirmed that the company was ready to acquire the East Kalimantan and Attaka blocks, saying the decision would not significantly aifect its financial health.
“It is possible. We have made some calculations for it [the acquisition],” he told The Jakarta Post on Friday.
Pertamina’s decision to take over the two blocks comes in the wake of the company’s poor financial performance. Between January and September last year, its net income fell by 29.7 percent year-on-year to US$1.99 billion following the government’s decision to maintain the prices of Premium gasoline and subsidized Solar diesel amid an increase in global crude prices.
Total E&P Indonesie
The Energy and Mineral Resources Ministry officially ordered Pertamina to handle the Tengah block and North Sumatra Offshore blocks. It said the company could operate the Tengah block more efficiently given that the operation of it was merged with that of East Kalimantan’s Mahakam block, which Pertamina recently took over from France’s Total E&P Indonesie and Japan’s Inpex.
Toshiaki Kitamura, the Inpex chief executive
In addition, the energy giant is also expected to merge the operations of the North Sumatra Offshore and North Sumatra B blocks, which are controlled by Pertamina subsidiary PT Pertamina Hulu Energi (PHE). Nevertheless, the ministry has also given the current contractors the chance to handle another four blocks the Tuban, Ogan Komering, Sanga-sanga and Southeast Sumatra blocks - through a proposed contract extension.
Ego revealed that the work plan and budget documents submitted by prevailing operators were better than those offered by Pertamina and, therefore, the latter could obtain the four blocks only if it revised its proposals to compete with its rivals.
Jakarta Post, Page-13, Saturday, Jan 27, 2018
Ego revealed that the work plan and budget documents submitted by prevailing operators were better than those offered by Pertamina and, therefore, the latter could obtain the four blocks only if it revised its proposals to compete with its rivals.
Jakarta Post, Page-13, Saturday, Jan 27, 2018
No comments:
Post a Comment