Contracts & Commercial

Indonesia signs Four Oil, Gas Contracts under Gross Split Scheme

Date: 11 July 2018; Type: Legal News; Source: Antara

Jakarta, July 11 (ANTARA News) - The Indonesian government, on Wednesday, signed four oil and gas block operation contracts, which will terminate in 2019 and 2020, under a gross split scheme.

The four oil and gas blocks are Bula, Salawati, Kepala Burung, and Malacca Strait, Chief of the Communication, Public Information Service and Cooperation Bureau at the Energy and Mineral Resources Ministry Agung Pribadi noted in a press statement released on Wednesday.

The total signature bonus that the state directly earns from the signing of the four contracts under a gross split scheme is US$5.5 million, he revealed.

With the signing of the four contracts, the government has forecast that total investment commitments in the first five years of the four oil and gas blocks will reach $148.4 million.

The 20-year production sharing contracts include extension and joint operation of oil and gas blocks between the earlier contractors and state oil and gas firm PT Pertamina.

Pribadi remarked that the government had signed contracts for the Bula Block with Kalrez Petroleum (Seram) Ltd, Salawati Block with Petrogas (Island) Ltd and PT Pertamina Hulu Energi Salawati, Kepala Burung Block with Petrogas (Basin) Ltd and PT Pertamina Hulu Energi Salawati Basin, and Malacca Strait Block with EMP Malacca Strait S.A and PT Imbang Tata Alam.

Under the contracts, Kalrez Petroleum (Seram) Ltd, Petrogas (Island) Ltd, Petrogas (Basin) Ltd, and EMP Malacca Strait S.A will respectively act as operators.

The existing contracts for Bula Block will terminate on October 31, 2019; Salawati Block on April 22, 2020; Kepala Burung Block on October 14, 2020; and Malacca Strait Block on August 4, 2020.

He said the participation rights of the contractors include 10 percent that will be offered to regional government-owned companies.

"The government has urged the contractors to continue to increase oil and gas production from their blocks or concession areas," he added.

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