With the extension, America’s ConocoPhillips, Indonesia’s Pertamina and Spain’s Repsol are slated to exploit the block for 20 more years after 2023, which is when the existing contract ends.
The extension also gives Pertamina a much larger participating interest in the block and changes the production sharing contract to a gross-split scheme, as mandated by Ministerial Regulation no. 8/2017.
“The government sees that existing contractors have the technical and financial capability to continue developing the Corridor Block,” Energy Minister Arifin Tasrif said at a contract signing ceremony on Monday. “I ask that contractors not only maintain existing production rates but also increase oil and gas production rates.”
Corridor’s natural gas production, which averages 1,100 million standard cubic feet per day (mmscfd), contributes 12 percent of Indonesia’s total production, making it a strategic asset for the country, Arifin said.
Oil and condensate production, although not as big a contributor to nationwide production, was around 6,600 barrels of oil per day (bopd).
In receiving the extension, the three companies paid a US$250 million signature bonus, which is a form of non-tax state revenue, and are committed to investing $250 million in developing the block for the first five years of the extended contract period.
Pertamina not only welcomed the contract extension but also the increase of its participating interest from 10 percent to 30 percent from 2023 onwards.
ConocoPhillips’s share will decrease from 54 to 46 percent and Repsol’s share from 36 percent to 24 percent.
“Pertamina remains committed to developing this block, whose fractured basement play [topography] is a challenge for us,” said Pertamina upstream director Dharmawan Samsu.
