Indonesia Grants 30 Percent Stake of Mahakam Gas Block to Total, Inpex

Indonesia announced Friday it will grant a 30 percent stake of the Mahakam gas block to be shared between French Total and Japanese Inpex, while giving the majority stake to state-owned oil firm Pertamina in 2018.

Oil giant Total, along with Inpex, has been running Mahakam, a huge natural gas block offshore of East Kalimantan province, since 1967. Total has expressed it wanted to continue operating the block when the contract expires at the end of 2017.

However, President Joko Widodo's government wanted Pertamina to take over the block despite doubts over Pertamina's technical and financial capacity.

"The consideration for the stake allocation is that Pertamina should really play the role of an operator which controlled the majority of interest, and we also want to give appreciation to the (current) operators which have given the investment," energy minister Sudirman Said told reporters.

Pertamina will have to share some of its 70 percent stake with a local East Kalimantan company, Said added.

To the frustration of foreign investors, calls for nationalisation of Indonesia's rich resources has grown louder in recent years.

"Most Indonesians now are very nationalistic, and at the same time the ideology of the ruling party is also nationalistic, so it matched," Komaidi Notonegoro, Jakarta-based research body ReforMiner Institute, told Agence France Presse.

"What happened now is something that the public like, even though investors such as Total might despise it," he added.

Total declined to comment on the decision.

"At this moment we will not issue any comment or statement regarding the Government of Indonesia’s decision on Mahakam after 2017," Kristanto Hartadi, a spokesman for Total E&P Indonesie, told AFP.