What in the blue hell is the problem?

Mahakam Block is a block which is located in the southeastern part of Kalimantan. Geologically speaking, this block is encompassing Delta Mahakam (generally, delta is where the river meet the ocean) and also acts as a part of Kutai Basin. This block consists of several oil fields that have produced more than one third of Indonesia’s oil production which some of them are Peciko Field, Tunu Field, Tambora Field, and many other fields. There are two companies which are currently in charge of Mahakam Block. They are Total E&P Indonesie (France) and Inpex.Corp (Japan) with each 50% of participant’s rights.

The issue is very clear, at least, for me, or if for some of u it’s still unclear, this is the reason: Total E&P Indonesie (France) and Inpex.Corp (Japan) with each 50% of participant’s rights. Summing those percentages, it’ll come to a conclusion that Indonesia, for a total 50 years periods of Total’s regime, were being robbed in a very huge amount of energy assets which of course equal with the huge income’s lost though there are still a very little percentage of income from the taxes for the government.

The current status

Total E&P Indonesie is in the negotiation phase to extend their contract with the maximum 20 years contract extension where the current contract will come to an end in 2017. Total already made the contract’s extension petition to our government since 2008 which is a very clever move since the minimum number of year to extend the contract is at least 10 years before the contract’s deadline. It means that this block is too precious to be abandoned ergo Total decides to extend their existence in Mahakam Blovk for several years again. I do believe that Total had already made some considerations, calculations, and interpretations about the future of Mahakam Block and it seems to be very promising.

Several denials from energy observers, politicians, and representatives from several universities (including mine) that showed an absolute disagreement stance with the extension of total’s contract due to some several reasons. This denial was noticed by the Asia-Pacific Total Committee and forced them to negotiate with the Ministry of Energy and Mineral Resources about the future of Total E&P Indonesia in regulating and exploiting Mahakam Block.

The offer that is given by Total E&P Indonesie is to divide the percentage of participant’s rights into 35% for Total, 35% Inpex, and 30% for Pertamina as a part of the agreement in the 2017’s extension contract. That means the ratio is 70:30 between the foreign contractors and the local contractor. The offer, by far, has not been responded by Jero Wacik as the minister of energy and mineral resources yet because this issue is still in the evaluation phase.

The offer that is given by Pertamina is to take over 100% of participant’s right and propose a transition period for 5 five years where Total will be in charge in that given time. Due to the regulation, after the contract is ended, the right to own a specific block is given back to the government (SKK Migas) ergo the bureaucracy to hand over Mahakam Block to Pertamina will not be tough and subtle. Pertamina, also, has also asserted its capabilities in handling Mahakam Block that will be more or less equal with what Total has been accomplished in the 50 year periods.

Indonesia’s current status as a net oil importer and gas exporter. This is the fact that we should know that though Indonesia has become the most productive country in producing petroleum in South-East Asia Region, our country imports oil due to the lack of abilities to refine the gross petroleum and one of the plan that are being developed by our government which is to apply ‘mix energy’ policy starting from 2025 where gas as its primary component.

Soo…

Now imagine u’re the people who has the highest authority (let’s say the minister of Energy and Mineral Resources) in determining our government’s further step. What stance will u take?

Will u let Pertamina take over Mahakam Block immediately after the contract ended in 2017? or will u take the reverse choice which is to extend Total’s contract for another (max) 20 years considering some severe impacts (ex: declining number or production, Pertamina incapability in operating Mahakam Block, or anything) that will happen if we kick Total from our country?

I have my contentions but let see how far u guys could state ur own contentions regarding to this motion