Jakarta. State energy company Pertamina started operating the Mahakam block offshore East Kalimantan on Monday (01/01), completing the takeover of Indonesia's largest oil and gas block from France's Total E&P Indonesie and Japan's Inpex.
Total and Inpex have operated the block for 50 years, with oil and gas output contributing about 13 percent of Indonesia's total production.
"As a representative of the Indonesian government, we would like to acknowledge the contribution and hard work by Total E&P Indonesie as contractor on the Mahakam oil and gas block and Inpex Indonesia as its partner," Amien Sunaryadi, the head of SKK Migas, Indonesia's upstream oil and gas regulator, said on Monday.
This takeover will see Pertamina contributing more than 30 percent of the nation's oil and gas production in 2018.
Subsidiary Pertamina Hulu Mahakam, which will handle the block's operation, has retained about 98 percent of the workers employed by the previous operators.
Pertamina Hulu Mahakam has also maintained contracts worth $1.27 billion in total with existing contractors to ensure continuity of production, said Syamsu Alam, Pertamina's upstream director.
Pertamina has set aside $1.7 billion for exploration, development and production activities in the Mahakam block this year to maintain the production rate.
The block produced around 52,000 barrels of oil and 1.36 million cubic feet of natural gas per day in November, the latest data from SKK Migas shows.
The block had proven reserves of 4.9 trillion cubic feet of gas, 57 million barrels of oil and 45 million barrels of condensate as of Jan. 1, 2016.
SKK Migas has set a target for the Mahakam block to produce 42,010 barrels of oil and 916 million standard cubic feet of gas per day this year.
Pertamina Hulu Mahakam plans to drill up to 69 exploration wells, up from 14 currently, to search for new reserves.