REPUBLIKA.CO.ID, JAKARTA -- The government finally decided to hand over full control of the Mahakam gas block to state oil and gas company PT Pertamina.

Pertamina will take over the gas block from Total E&P after the French oil giant ends its contract for the block in East Kalimantan in 2017.

Head of the performance control unit of the energy and mineral resource ministry Widhyawan Prawiraatmadja said the government will not interfere in determining the Mahakam block share splits.

"We hand it over 100 percent to Pertamina . It is up to Pertamina whether it it is to be the single shareholder or it will need partner," Widhyawan said here on Thursday (12/3).

The government will neither take part in determining the involvement of the East Kalimantan provincial administration as a shareholder of the block.

Earlier, East Kalimantan Governor Awang Faroek Ishak said the central government had a scenario in the share splits with Pertamina to have 51 percent, Total 30 percent and the regional administration 19 percent.

Widhyawan, however, repeated saying,"It is all up to Pertamina."

He said the government will soon send a letter to Pertamina about its decision and another to Total about the termination of its contract.

Pertamina already presented to the government describing its ability to operate the gas block.

Widhyawan said the government will assure that the process of transferring control of the block from Total to Pertamina would be smooth.

The block produces gas equivalent to around 280,000 barrels of oil per day.

Earlier Total E&P Indonesie proposed a five-year transition in the transfer of the operation of the block after the termination of its contract in 2017.

"Whatever the decision of the government and its long term effect, we ask the government to allow a five year transition," President and General Manager of Total E&P Hardy Pramono said.

Hardy said among the goals of the proposed transition is to make the process of transfer smooth from Total to Pertamina and to secure the investment program needed to maintain productivity in the coming years.

"In addition to guarantee implementation of commitments in gas shipments to domestic and international buyers," he said.

Widhyawan said the option of involving Total could be considered under a swap scheme with Pertamina given a stake in Total's projects abroad.

He said a contract between Pertamina and Total could be signed in 2015 although it would be effective only after the termination of Total's contract in 2017 .

"That will give a long transitional period for Pertamina before it will take over the operation of the block from Total," he said.

During the transitional period, a number of issues related to the contract could be settled such as sales of gas and oil, supporting services and the workers, he said.

The Indonesian unit of the French oil and gas giant as the operator of the block, has a 50 percent stake with Japan's Inpex Corporation holding the remaining 50 percent.

Total E&P Indonesie will end its contract after 50 years operating the block , one of the country's largest gas reserves.

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