On 17 July 2019, Pertamina Hulu Mahakam (PHM) signed an agreement for the transfer of 10% participating interest (PI) in the Mahakam Offshore PSC to PT Migas Mandiri Pratama Kutai Mahakam (MMPKM), a company owned by the East Kalimantan provincial government. The signing ceremony at Pertaminaâs head office in Jakarta was attended by senior officials of both companies.  Following the agreement, the parties will seek final approval from the Ministry of Energy and Mineral Resources (MEMR) for the PI transfer, which is in line with Ministerial Regulation (MR) no. 37/2016. Upon approval, Pertamina will maintain 90% interest and operatorship in the PSC.  On 19 September 2019, Pertamina and MMPKM signed a Heads of Agreement on 19 September 2018 to lay the foundation for the interest transfer. Pertamina formally offered the 10% PI to MMPKM, in representation of the East Kalimantan government, on 15 March 2019.  MR 37/2016 is aimed at providing direct benefits from oil and gas activity to the local administrations by granting a participation to developing and producing blocks. In accordance with the regulation, the local participant will be carried for operational expenditures in the block, and it will repay the funds via deduction from its production share. The local company will not be allowed to transfer all or part of its 10% PI to other parties through the remaining duration of the contract.  PHM is continuing with development drilling activities in the block in order to reduce production decline. The company completed 52 development wells in 1H 2019, out of the annual target of 118 wells. Thanks to the sustained effort, the decline rate as of July 2019 was 25% compared to 57% in 2017, prior to Pertamina taking over operations. The block was producing approximately 700 MMcfg/d in July 2019.  PHM, a fully owned subsidiary of PT Pertamina, is operator of the block with 100% interest. The company was assigned the Mahakam Offshore PSC in January 2018, after the expiry of the previous contract operated by Total.  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) signed an agreement for the transfer of 10% participating interest (PI) in the Mahakam Offshore PSC to PT Migas Mandiri Pratama Kutai Mahakam (MMPKM), a company owned by the East Kalimantan provincial government.