Indonesia has decided Pertamina will take over operation of the Rokan oil block, the country's second-biggest crude producing field, once Chevron's operating contract there expires in 2021, Deputy Energy Minister Arcandra Tahar said on Tuesday.
Rokan has been a focus area for Chevron, which asked Indonesia earlier this year to extend its operating contract beyond 2021.
A proposal made by Chevron for an extension of its contract after 2021 was "far below" an offer made by Pertamina, Tahar told reporters at a press conference, referring to a comparison of projections of state revenue and other terms proposed by both companies.
State-owned energy company Pertamina will operate Rokan from Aug. 8, 2021 to 2041, under a gross split production sharing contract, Tahar said.
"We've agreed on terms and conditions. All that's left is for us to put this into a document that will be signed by Pertamina and the government," Tahar said.
Pertamina estimates its capital expenditure on Rokan will reach around $70 billion over the 20-year life of its contract, Pertamina Upstream Director Syamsu Alam said.
"There's several opportunities there to optimise several fields," Alam said. He added the company plans to trial the use of chemical enhanced oil recovery methods in Rokan from 2024.
He also said Pertamina would initially "focus on managing fields that Chevron hasn't focused on, where the potential is quite large."
"There are several layers we've identified that still need exploration," Alam added.
"If all of this runs well, hopefully we can control the decline so that production from 2021 onward doesn't drop much."
Pertamina hoped to begin talks with Chevron regarding the operational transition as soon as possible, Alam said.
"We have to talk about everything."
A Jakarta-based spokeswoman for Chevron did not immediately respond to a request for comment on the matter.
Crude oil lifting by Chevron unit Chevron Pacific Indonesia, operator of the Rokan block, hit 207,148 barrels per day in the first half of 2018, below a 2018 budget target of 213,551 bpd.
Reporting by Wilda Asmarini Writing by Fergus Jensen
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