On 19 September 2018, Pertamina Hulu Mahakam (PHM), operator of the Mahakam Offshore PSC, reportedly signed a Heads of Agreement (HoA) for the transfer of 10% Participating Interest (PI) to a company owned by the provincial government of East Kalimantan, PT Migas Mandiri Pratama Kutai Mahakam. Following the HoA, the companies have committed to continue discussions regarding the PI transfer until the final agreement, which is expected to be signed within six months.  The 10% PI transfer to local government-owned enterprises is in compliance with Ministerial Regulation No. 37/ 2016, aimed at providing direct benefits from oil and gas activity to the local administrations. The regulation applies to blocks in development and production stage.  PHM, a fully owned subsidiary of Pertamina, is operator of the block with 100% interest. The company was assigned the Mahakam Offshore PSC since January 2018, after the expiry of the previous contract operated by Total.  The block reportedly had reached an average production of around 960 MMcfg/d as of August 2018, below the annual target of 1,008 MMcf/d. Liquids production was reported at 43 Mb/d, compared to the target of 46 Mb/d. Pertamina has deployed two swamp barges and one jackup rig in the first half of the year. The company is seeking at least one additional rig to accelerate development drilling in the block.   Background Information  The original 16,870 sq km Mahakam PSC was awarded to Japex on 31 March 1967. No bonuses were due at the time of the award but the PSC carried a Work Obligation of USD 7.5 million in six years. Total farmed in to the PSC in 1970 and assumed operatorship. Partial relinquishments in 1970 and 1973 reduced the block to 8,685 sq km by the time of its Extension, which was granted on 11 January 1991 and effective 31 March 1997. The Extension excluded the unitised Attaka field. By this time Inpex had replaced Japex in the partnership. The Extension was awarded upon a Signature Bonus of USD 15 million and a Work Obligation of USD 63 million covering the period 1 January 1990 to 30 March 1997. Subsequent partial relinquishments have resulted in a final retained area of less than 6,000 sq km.  Indonesian government decided to award the block to Pertamina after the expiry of the first PSC extension in 2017. In preparation to the takeover, Pertamina, together with SKK Migas representing Indonesian Government, signed a new contract extension for the Mahakam Offshore PSC on 29 December 2015. The official signing was witnessed by Indonesian Minister of Energy and Mineral Resources. The new contract became effective on 1 January 2018, until 31 December 2037.  The signature bonus to be paid by Pertamina was set at USD 41 million, the highest signature bonus ever in Indonesia. Production bonuses will be USD 5 million (for cumulative production of 500 MMboe), USD 4 million (for cumulative production of 750 MMboe) and USD 4 million (for cumulative production of 1,000 MMboe).
Pertamina Hulu Mahakam (PHM), operator of the Mahakam Offshore PSC, reportedly signed a Heads of Agreement (HoA) for the transfer of 10% Participating Interest (PI) to a company owned by the provincial government of East Kalimantan, PT Migas Mandiri Pratama Kutai Mahakam. 