SKK Migas Refuses to Intervene in the Fate of Kufpec"s Shares in ONJW

Anggita Rezki Amelia
7 April 2016, 09:19
skk migas
Arief Kamaludin|KATADATA

Pertamina has to work harder to convince Kuwait Foreign Petroleum Exploration Company (Kufpec) to sign a new management contract for the Offshore North West Jawa (ONWJ) Block. Pertamina had sought recourse from the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) to intervene and help find a solution,but was rejected.

Head of Public Relations of SKK Migas, Elan Biantoro, said that his agency could help Pertamina close the deal on the portion of the block’s management rights as this problem is a purely business matter between the state oil firm and Kufpec. “If SKK Migas intervenes, we will be accused of having an interest in the block,” he told Katadata, Wednesday (6/4). 

Elan added that negotiations about share allocation in a working area is a purely business matter between the operator and its partners. SKK Migas simply recorded the agreement on share allocation between the two. According to the production sharing contract (PSC), the function of the task force is limited to supervising the operator’s activities, not that of its partners. But if the negotiation stalls and Kufpec still refuses to sign the contract, Elan expects Pertamina to continue managing the ONWJ Block with its existing partners.

To date, Kufpec has been unwilling to sign a renewed production sharing contract for the ONWJ Block, even though the government approved Pertamina’s contract renewal at the end of last year. The existing PSC for the block, which is located in West Java, is due to expire next year. (Read: Kufpec Has Not Agreed on Management Right Portion in ONWJ Block)

It is thought that the Kuwaiti petroleum company has not agreed to the reduction in its management rights in the block after 2017. Under the existing PSC, Kufpec holds a 5 percent participating right in the ONWJ Block. The other stakeholders of the block are Bakrie Group’s Energi Mega Persada (36.72 percent), and Pertamina, the operator of the block (58.28 percent).

After 2017, however, the participating interest of each of these companies will change. At the start of next year, Pertamina’s portion will be 72.5 percent while the portions of Energi Mega Persada and Kufpec will be cut to 25 percent and 2.5 percent, respectively.(Read: Pertamina to Negotiate with Old Partners on ONJJW Block Contract Renewal)

Meanwhile, President Director of Pertamina Hulu Energi (PHE) Gunung Sardjono admitted that the negotiations with Kufpec over the management rights of the block have not been concluded. In fact, the Kuwaiti company was not present at the signing of the renewed PSC at the end of last year. (Read: Renewed PSCs on Mahakam and ONWJ Blocks Are Signed Using New System)

Nevertheless, Gunung will leave the matter to the government. He said that the Ministry of Energy and Mineral Resources is well acquainted with the issue. “It will be resolved by the Directorate General of Oil and Gas because it is within the Ministry of EMR. We will comply with the government’s decision,” he told Katadata, Wednesday (6/4).

Reporter: Arnold Sirait
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