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Pertamina Seeks Deadline on Joining Total Gas Block

Source: Reuters 3/18/2010, Location: Asia

Indonesia's state oil and gas firm Pertamina said it wanted to reach an agreement by next month to participate in the country's Mahakam gas block, operated by France's Total.

Indonesian Energy Minister Darwin Saleh said last week the government wanted Total to give Pertamina a role in the Mahakam block off Borneo island before extending the contract.

Saleh warned that the government could take over the block, which is one of Indonesia's biggest gas fields, after the contract expired in 2017 if Pertamina did not get a role.

"I want us to have reached a deal (on the Mahakam block) by April," Pertamina President Director Karen Agustiawan told reporters, adding that a deal next month would mean the firm could enter the project this year.

She said Pertamina has previously sent a letter to Total seeking between 15 percent to 25 percent participation.

Agustiawan said that Total was reluctant to offer shares because of their lengthy involvement in the block.

"That's normal. But this is Indonesia's asset and we have to have a part of it too," Agustiawan said.

"We have prepared the financing. We will finance the stake from internal and external sources," she added.

Judith Navarro, a spokeswoman for Total Indonesia, said the company and Pertamina were in talks to seek an agreement.

"Total and Inpex positively view the Indonesian government's expectations (on Mahakam) and at the moment discussions are under way," Navaro said.

Total has previously said it wanted the Indonesian government to extend its operating contract in the Mahakam block, which is due to expire in 2017.

Total and Japan's Inpex each hold 50 percent in the block offshore East Kalimantan on Borneo, which supplies most of the gas for Indonesia's Bontang liquefied natural gas plant.

Minister Saleh has said in theory the the block could be returned to the state when the contract expires but an extension would be considered as long as it benefited the country.

Pertamina has previously indicated it wants to expand its upstream activities to boost oil and gas production, and that it was looking at several potential oil and gas fields.

Ownership and control of energy and mineral resources in Indonesia is politically sensitive, particularly when it involves foreign companies, and some politicians frequently make nationalistic noises on the issue.

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