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Ada Pertanyaan? Hubungi Kami Ari Pramuditya, Kartini L Makmur
Pertamina. Photo: SGP
The Indonesian Government, in this case represented by the Ministry of Energy and Mineral Resources (Energi dan Sumber Daya Mineral - “ESDM”), and PT Pertamina, have agreed on a production-sharing mechanism for the Mahakam Block. Both parties have also agreed to a signature-bonus amount. All being well, the signing of the Production Sharing Contract (“PSC”) will be completed by the end of this year.
Syamsu Alam, the director of Pertamina Upstream, stated that the signing of the PSC for the Mahakam Block was likely to be implemented by the end of this month. According to Alam, although the current PSC will remain in force until the end of 2017, the various steps taken this year with respect to the agreement represent an important target.
The director expressed his hope that if the PSC was signed soon, then his team would be able to focus on preparing the other processes related to the takeover of the Mahakam Block from Total E&P Indonesie.
“Even though the current PSC will still be in force at the end of 2017, the signing of the new PSC this year means that a significant milestone has been achieved. Thus, we are focusing on preparing ourselves for the takeover process of the Mahakam Block,” Mr. Alam revealed in a statement made on Thursday, 10 December 2015.
Nevertheless, Mr. Alam has so far refused to reveal the production-sharing figures as agreed between the government and Pertamina. According to Alam, agreement on both sides is the way forward and that any final amounts agreed upon can only be made public after the PSC has been signed.
“We will have to wait until the PSC signing first. We expect that by the end of this December, the PSC for the Mahakam Block will have already have been signed,” Mr. Alam clarified.
As is widely known, the Cooperation Contract (Kontrak Kerja Sama – “KKS”) for the Mahakam Working Area was signed on 6 October 1966 and expired on 30 March 1997. The contract was then extended on 11 January 1997 and this extension expires on 31 December 2017.
The government has awarded the management of the Mahakam Block to Pertamina with 100% rights being granted to the state oil producer. Nevertheless, demands were made that production-sharing agreements should be worked out with other parties who may benefit up to a maximum of 30%.
Up to the present day however, Pertamina has still to decide whether Total E&P Indonesie and the Inpex Corporation will be involved once more in the management of the Mahakam Block, or whether the block can be managed by Pertamina alone.
Mr. Alam stated for the record that the negotiation process involved in reaching a profit-sharing agreement for the Mahakam Block in East Kalimantan had been tough. Alam explained that there were several options for the distribution of the production-sharing portion with regard to the block. In the end, it was decided that production sharing was to be determined after a consideration of conditions in the field.
As a result of this calculation, the state is set to receive a bigger portion of the revenues from the producing field. In contrast, the portion of the revenues received by the state will be smaller in the exploration field. A cost-over-revenue concept has also been proposed by the Directorate General of Oil and Gas at the Ministry of ESDM
In addition, a signature-bonus scheme has also been formulated and is based on the asset value of the Mahakam Block. Once the asset value of the block in East Kalimantan has been determined, then the government will then determine the amount of the signature bonus.
The government will also determine how much Pertamina will pay for the assets, most likely between 0.5% and 1%. Previously, the government has stated that the range of any production bonus would be between USD 25 million and USD 55 million.
Djoko Siswanto, acting as the Director of the Upstream Oil and Gas for the Ministry of ESDM, also admitted that the discussions relating to the PSC for the Mahakam Block have been tough. Nonetheless, he concurred with Pertamina and stated that he was confident that the new PSC would be signed before the end of this year.
(sp)
Ari Pramuditya, Kartini L Makmur
Pertamina. Photo: SGP
The Indonesian Government, in this case represented by the Ministry of Energy and Mineral Resources (Energi dan Sumber Daya Mineral - “ESDM”), and PT Pertamina, have agreed on a production-sharing mechanism for the Mahakam Block. Both parties have also agreed to a signature-bonus amount. All being well, the signing of the Production Sharing Contract (“PSC”) will be completed by the end of this year.
Syamsu Alam, the director of Pertamina Upstream, stated that the signing of the PSC for the Mahakam Block was likely to be implemented by the end of this month. According to Alam, although the current PSC will remain in force until the end of 2017, the various steps taken this year with respect to the agreement represent an important target.
The director expressed his hope that if the PSC was signed soon, then his team would be able to focus on preparing the other processes related to the takeover of the Mahakam Block from Total E&P Indonesie.
“Even though the current PSC will still be in force at the end of 2017, the signing of the new PSC this year means that a significant milestone has been achieved. Thus, we are focusing on preparing ourselves for the takeover process of the Mahakam Block,” Mr. Alam revealed in a statement made on Thursday, 10 December 2015.
Nevertheless, Mr. Alam has so far refused to reveal the production-sharing figures as agreed between the government and Pertamina. According to Alam, agreement on both sides is the way forward and that any final amounts agreed upon can only be made public after the PSC has been signed.
“We will have to wait until the PSC signing first. We expect that by the end of this December, the PSC for the Mahakam Block will have already have been signed,” Mr. Alam clarified.
As is widely known, the Cooperation Contract (Kontrak Kerja Sama – “KKS”) for the Mahakam Working Area was signed on 6 October 1966 and expired on 30 March 1997. The contract was then extended on 11 January 1997 and this extension expires on 31 December 2017.
The government has awarded the management of the Mahakam Block to Pertamina with 100% rights being granted to the state oil producer. Nevertheless, demands were made that production-sharing agreements should be worked out with other parties who may benefit up to a maximum of 30%.
Up to the present day however, Pertamina has still to decide whether Total E&P Indonesie and the Inpex Corporation will be involved once more in the management of the Mahakam Block, or whether the block can be managed by Pertamina alone.
Mr. Alam stated for the record that the negotiation process involved in reaching a profit-sharing agreement for the Mahakam Block in East Kalimantan had been tough. Alam explained that there were several options for the distribution of the production-sharing portion with regard to the block. In the end, it was decided that production sharing was to be determined after a consideration of conditions in the field.
As a result of this calculation, the state is set to receive a bigger portion of the revenues from the producing field. In contrast, the portion of the revenues received by the state will be smaller in the exploration field. A cost-over-revenue concept has also been proposed by the Directorate General of Oil and Gas at the Ministry of ESDM
In addition, a signature-bonus scheme has also been formulated and is based on the asset value of the Mahakam Block. Once the asset value of the block in East Kalimantan has been determined, then the government will then determine the amount of the signature bonus.
The government will also determine how much Pertamina will pay for the assets, most likely between 0.5% and 1%. Previously, the government has stated that the range of any production bonus would be between USD 25 million and USD 55 million.
Djoko Siswanto, acting as the Director of the Upstream Oil and Gas for the Ministry of ESDM, also admitted that the discussions relating to the PSC for the Mahakam Block have been tough. Nonetheless, he concurred with Pertamina and stated that he was confident that the new PSC would be signed before the end of this year.
(sp)