Petronas: Proportional Cut to be done for Central Java Stake in Muriah

KATADATA ? Petronas Caligari Muriah Ltd. and Saka Energi Muriah Ltd. have not found a deal regarding the stake division in Muriah Block. This is in relation with the participating interest of the Central Java?s local government in that block.

Currently Petronas owns 80% stake of the block, while Saka owns the remaining 20%. However, the government has decided to grant the participating interest of the block in the amount of 10% to the Central Java local government. The consequence from this decision would be that a proportional cut in the share ownership portion of Petronas as well as Saka.

Petronas does not wish to experience the cut alone. The Petronas Carigali Muriah Senior Corporate Affairs and Administration Manager Pudja Kartawidjaja said that the cut in the shares must be done proportionally for every company.

And thus if Petronas stake is to be cut, then Saka?s must also be cut proportionally. And considering that option, then Petronas stake would only be at 72%, while Saka would only have 18%; since the local government would get 10% of the block?s stake. Pudja mentioned that this is due to the government?s rule, which comes from the Energy and Mineral Resources (EMR) Minister.

?As I know it, each will be cut by 10% proportionally, from Petronas and also the partner,? said Pudja to Katadata, Thursday (3/9).

Meanwhile, Saka does not wish to share their stake with the local government. The President Director of the Perusahaan Gas Negara (PGN) Hendi Prio Santoso said that there would be no cut in their subsidiary?s stake, the Saka Energi Muriah Ltd. ?The stake will not be diluted, we?ll follow the regulator?s instruction, but no dilution. Even if it would have been less later on, surely the regulator must consider so that no sides are to suffer loss,? said Hendi.

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Public Relation Chief, Elan Biantoro, said that his side does not have the authority to set which side that can cover for the 10% of the local government?s stake. This must be from the agreement of both sides, between Petronas and Saka.

?It?s in line with the production-sharing contract (PSC) scheme that has been signed by both sides. The offer has been done by Petronas, but for the coordination to the regional company, I still don?t know,? said Elan.

The oil and gas block offer for the local government has actually been regulated in the Government Regulation No. 35 Year 2004 regarding the oil and gas upstream business activities. The contractor is obligated to offer 10% PI to the local government that is represented by the regional company.

According to Elan, the problem regarding the 10% division for the PI to the regional company is out of their league to regulate since the mandatory rule only applies when the cooperation contract signed after 2004. ?Since the Kepodang Field, Muriah Block, is signed before 2004, then the company could not be obligated to share the 10% stake,? said Elan.