Pertamina needs to improve work plan

The government has given state-owned energy giant Pertamina until the end of January to improve its work program and budget (WPSCB) proposals for four oil and gas blocks. Otherwise, those blocks will remain in the hands of their current operators.

oil and gas blocks

The Energy and Mineral Resources Ministry mandated in January 2017 that Pertamina take over eight oil and gas blocks, all of which would see their contracts with their current operators expire in 2018. The blocks are: Tuban, Ogan Komering, Sanga-sanga,  Southeast Sumatra, North Sumatra Offshore (NSO). Tengah, East Kalimantan and Attaka.

However, the ministry has given a chance to the current contractors of four of the eight blocks to submit a proposal to extend their operatorship. The four blocks are Tuban, Ogan Komering, Sanga-sanga and Southeast Sumatra.

The ministry has compared the WP&B proposed by the four contractors with the ones proposed by Pertamina.

“ln general, the current contractors of the four blocks have submitted better proposals than Pertamina,” the ministry’s secretary-general, Ego Syahrial, said on Thursday.

“We have handed over all of the documents [from the current contractors] to Pertamina. So, now the ball is in Pertamina’s court. If Pertamina can improve and match its proposals with other contractors in the next few weeks, we will grant the four blocks to the company” Ego said Pertamina. did not have to single-handedly operate the four blocks. If needed, the company could jointly operate those blocks with other contractors while still controlling the blocks’ majority stake, he added.

At present, Pertamina’s subsidiary Pertamina Hulu Energi jointly operates the Tuban block in East Java and the Ogan Komering block in South Sumatra with China’s PetroChina and Singapore’s Jadestone Energ, respectively.

China National Odshore Oil Corporation (CNOOC) operates and holds the majority stake in Southeast Sumatra block. Mean-while, the Sanga-sanga block in East Kalimantan is jointly operated by several contractors, including local firm PT Saka Energi Indonesia, ltaly’s Eni and the United States-based Overseas Petroleum and Investment Corp. (OPIC).

“We will still show our partiality for Pertamina as a national oil company for these four blocks. We plan to make a decision on these four blocks in January” Deputy Energy and Mineral Resources Minister Arcandra Tahar said.

Aside from the four blocks, the government has officially ordered Pertamina to take over the Tengah and NSO blocks. The ministry says Pertamina will be able to operate the Tengah block more efficiently because the block has unitized operations with the Mahakam block in East Kalimantan, which was taken over recently by Pertamina from France’s Total E&P lndonesie and Japan’s lnpex 

Pertamina is also expected to merge the operation of the NSO block with the North Sumatra B (NSB) block, all of which are currently operated by Pertamina Hulu Energi, for further efficiency For the East Kalimantan and Attaka blocks, Pertamina will return these two blocks to the government. 

The firm said it would be too costly to bear the burdens coming from the blocks’ abandonment and site restoration. Hence, the ministry plans to offer these two blocks through a special auction in March. 

“We hope we can find the tender winners and sign contracts with them by the end of August,” Ego said.

The ministry previously said it would open another tender in January for 22 oil and gas blocks that failed to attract investors in 2015-2016 auctions, as well as for ll other new blocks.

“We are still evaluating which blocks will be put up for auction, as we will only offer blocks with good seismic data,” Ego said, 

While adding that the ministry had found it difficult to improve the seismic data quality of many oil and gas blocks in the country due to a lack of budget.

This year, the ministry has allocated Rp 58 billion (US$4.32 million) to conduct 2D seismic surveys in Southeast Sulawesi and West Kalimantan, down from Rp 75 billion in 2017.

Jakarta Post, Page-13, Friday, Jan 5, 2018