Pertamina Takes Over Rokan Block From Chevron

For more than 90 years, Rokan Block has been fully operated by Chevron. Now, the government through The Minister of Energy and Mineral, Arcandra Tahar, has decided to give Pertamina the full management rights of the oil and gas block starting from 8th of August 2021 until the next twenty years.

The government’s decision to choose Pertamina as the operator of Rokan Block is not because of political factors. Instead, it is due to the government’s thorough evaluation of the proposal from both Pertamina and Chevron. In terms of commercial gain, Pertamina offered a bonus of US$784 million or around Rp11,3 trillion which will gain US$ 500 million or around Rp7,2 trillion in five years. Not only that, the potential income that can be gained from this takeover for the next 20 years will reach US$ 57 billion or approximately Rp825 trillion.

Despite Chevron’s offer to extend its ownership of the oil block, Tahar claims that Pertamina’s offer is way more beneficial than the US-based oil company. In addition, after the whole block is successfully taken over by Pertamina, the local government in Riau will gain participation rights as big as ten percent to the appointed Regional-Owned Company (Badan Usaha Milik Daerah).

Chevron was disappointed by the government’s decision; however, the company is still hesitant to completely leave the contract since they tried to convince the government to extend the contract until 2041. They even suggested US$ 88 billion worth of investment to Indonesia in order to gain ownership of the block again. Chevron will do further coordination with corresponding parties to gain further information.

Rokan Block has two main oil mines which are Minas and Duri. Minas was founded by an American geologist Walter Nygren in 1939. It was even claimed as South East Asia’s biggest oil mine producing Sumatran Light Crude oil. When the Minas mine was found, the first one to drill it was Caltex, now known as Chevron, in 1924.

Sumur Duri produced 300,000 bph in 1993, while Minas reached its peak in 1973 when it produced 440,000 bph. Caltex (now Chevron) received contract of operations since 8th of August 1971 and it lasted for 30 years. After the contract ended in 2001, the government extended it until 2021. In conclusion, the total production of oil which was received by Indonesia from the two sources has reached a level of 2,6 billion barrels of oil.

Sources:

Detik

Kompas

CNN Indonesia

What would you like to learn about next week?

Like, share, and comment down below.