The government remains indecisive over who will operate the Siak oil block in Riau, Sumatra, despite that PT Chevron Pacific Indonesia’s contract to operate the 2,480-square kilometer block will expire on Nov. 27.
Deputy Energy and Mineral Resources Minister Susilo Siswoutomo told The Jakarta Post on Thursday that his office was still evaluating the existing production-sharing contract (PSC) for the vast block that encompasses four Riau regencies: Kampar, Rokan Hulu, Rokan Hilir and Bengkalis.
It was earlier reported that Chevron, which operates mostly in Sumatra, had proposed a contract extension in 2010.
Meanwhile, the Riau provincial administration expressed its willingness to take over operations through PT Riau Petroleum, a locally owned firm.
The government stated that it would need to conduct a thorough examination before it decided on whether or not to grant operatorship to a local oil and gas firm.
“It is not easy to develop oil and gas as it requires a large amount of capital expenditure and thus the bankability of the company is a requirement. In addition, the contractor must also have significant experience in such a high-risk business. Having said that, a lot of aspects need to be discussed,” Susilo said in a text message.
“If locally owned companies can meet those requirements then they may take over the concession.”
The Siak block is among the 29 concessions due to expire sometime between 2013 and 2021. Other blocks include Mahakam in East Kalimantan, currently operated by France-based Total E&P Indonesia, which is set to expire in 2017.
Salawati, operated by Intermega Sabaku, will expire in 2015 and Corridor, operated by ConocoPhillips Indonesia, will end in 2016. PetroChina’s operations in Kepala Burung, Papua, will expire in 2016 and Arun B, operated by ExxonMobil, is due to expire in 2017.
Siak is just one of the blocks run by Chevron, the largest crude oil producer in the country, beating Indonesia’s state-owned PT Pertamina and French giant Total SA’s local subsidiary, Total E&P Indonesie.
The block currently produces 2,000 barrels per day (bpd) of crude oil or equal to 0.6 percent of Chevron’s total average production of 330,000 bpd or 40 percent of Indonesia’s total oil output.
PT Riau Petroleum commissioner Abdi Haro was quoted by Bisnis Indonesia on Thursday as saying that his company had received a recommendation from the government to jointly operate the block with Chevron.