Pertamina Prepares $1.8 Billion to Manage Mahakam Block

Previously, the Energy and Mineral Resources Ministry’s oil and gas director general, Ego Syahrial, said Mubadala Petroleum, a United Arab Emirates firm, expressed interest in jointly managing Mahakam block with PHI.

State-owned energy firm Pertamina is preparing Rp24.3 trillion (US$1.8 billion) to start managing the Mahakam oil and gas block on Jan. 1, 2018, as Total E&P Indonesie’s (TEPI) contract is set to expire.

Pertamina is currently drafting a 2018 work program and budget (WP&B) that will be discussed with the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) later this month, Pertamina Hulu Indonesia (PHI) president director Bambang Manumaryoso said recently.

In the WB&B, Pertamina, through PHI, will allocate $700 million in investments and $1.1 billion in operational funds, all of which will come from internal funds.

“Insya Allah [God willing], we are [financially] healthy enough. We will spend [company resources] if we have the opportunity. We are flexible in financing projects,” Bambang said as quoted by kompas.com.

He added that Pertamina could manage the block alone, but was still open to taking on partners and investors as they would help PHI in boosting Mahakam’s productivity.

However, he pointed out that Mahakam was an old oil and gas block that was full of challenges.

“Also, the internal rate return is only 10 percent. We dare to take it, but the partners [private firms] considered it uneconomic,” he added.

Previously, the Energy and Mineral Resources Ministry’s oil and gas director general, Ego Syahrial, said Mubadala Petroleum, a United Arab Emirates firm, expressed interest in jointly managing Mahakam block with PHI. (bbn, The Jakarta Post)