32 Companies Interested in Shell Shares in Masela Block

The Ministry of Energy and Mineral Resources (ESDM) stated that there are 32 oil and gas companies that have been allowed to open data (open data) of the Masela Block. The data will be opened after Shell has released its participating interest (PI) in the Masela Block.

Acting Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Ego Syahrial, confirmed that Shell would indeed release PI ownership in the Abadi LNG Project, the Masela Block. The opening of data for oil and gas companies interested in taking Shell's PI has also been approved.

the Masela Block

"There are 32 oil and gas company candidates who are in the process of opening this data. The government is certainly looking for the best competence, "he said.

According to him, 32 oil and gas companies that are currently disclosing this data are large oil and gas companies. Not only that, but foreign companies interested in taking Shell shares have also been given permission to view the data.

"That means if there are companies from within the country, maybe just a few companies. Who is the biggest company in the country, most importantly Pertamina, Medco, ”said Ego.

Despite the change in shareholders in the Masela Block, Ego emphasized that the Abadi LNG Project must continue.

"Of course, the government's goal is how the Eternal LNG Project will continue and in 2027 the gas can [operate]. That's all, "said Ego.

Dwi Soetjipto

Previously, the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto revealed that the process of transferring ownership of PI is likely to be completed next year if Shell has obtained a potential buyer.

"I think it will last up to 1-1.5 years. If the divestment will continue, no later than 2021 it must be completed, ”he said.

The Abadi project is targeted to start operating in the second quarter of 2027. The US $ 19.8 billion projects undertaken by Inpex Masela Ltd is projected to produce 150 mmscfd of piped gas and 9.5 million tons of LNG per year.

Currently, Shell holds 35% PI in the Masela Block, while the rest is owned by Inpex. Based on data from SKK Migas, until last March, the work on the Abadi Project's environmental impact analysis (Amdal) approval was still 43.41% of the target of 47.27%.

In addition, the auction process for front end engineering design / FEED onshore liquefied natural gas / LNG refinery facilities, production and floating production facilities, storage and offloading / FPSO, gas pipelines, as well as subsea umbilical, riser, and flowline (SURF) facilities are still taking place.

Oil and Gas Investment

Meanwhile, the Ministry of Energy and Mineral Resources noted the realization of national oil and gas investment in the first half of 2020 amounting to the US $ 5.6 billion or only 38.6% of the target of US $ 14.5 billion. However, with the starting to increase in oil prices, oil and gas investment in the future will improve. 

    Acting Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Ego Syahrial, said that his party continues to strive for optimal oil and gas investment climate.

However, the Covid-19 pandemic, which depressed global crude oil prices, he admitted had an impact on national oil and gas investment. This is because the drop in oil prices was followed by cuts in investment budgets by major world oil and gas companies.

"We had targeted oil and gas investment at the US $ 14.5 billion, but the realization still reached the US $ 5.6 billion. So it is still far away, still a third, "he said.

Of the US $ 5.6 billion investment, the US $ 4.85 billion came from the upstream oil and gas sector and the US $ 712.26 million from the downstream oil and gas sector. When compared with the Performance Report (Lakin) of the Directorate General (Ditjen) of Oil and Gas 2019, the realization of downstream oil and gas investment in the first semester of 2020 is quite good.

This is because, in the one year period in 2019, the realization of downstream oil and gas investment was the only US $ 1.06 billion. In detail, the realization of downstream oil and gas investment until last June, namely investment in processing infrastructure of the US $ 299.17 million, transportation of US $ 346.44 million, storage of US $ 21.67 million, and trade of US $ 44.98 million.

ESDM Ministry's Oil and Gas Program Development Director Soerjaningsih revealed that the downstream oil and gas project investment includes a refinery project undertaken by PT Pertamina (Persero).

"The downstream investment comes from the Balikpapan and Tuban refinery projects, as well as the BBM (fuel oil) and BBG (gas fuel) transportation projects," he said.

For the performance of the upstream oil and gas sector, Ego said that the realization of oil lifting as of last June had approached the change target of 705 thousand barrels per day (BPD). Even if compared to the initial target of 755 thousand bpd it is indeed very far away.

“Like it or not, the upstream oil and gas performance is affected by low investment. This is the impact of all major oil and gas companies in the world to cut investment, "he said.

Oil and Gas Block Auction

To increase oil and gas investment in the future, Ego added that the government will auction off 10 conventional oil and gas blocks this year. Along with the preparation for the oil and gas block auction, his party has communicated with potential investors regarding the schedule for opening this oil and gas block auction. Several investors asked for the auction to be postponed for the rest of the year in the hope that oil prices would improve.

"The announcement option in the near future will be decided whether it is the end of the third quarter or the beginning of the fourth quarter of this year," he said.

The oil and gas block auction is also planned not to be held simultaneously. Ego explained that currently the final evaluation of the 10 oil and gas block candidates is being carried out. This evaluation is more attractive terms and conditions and the implementation of production sharing contract / PSC gross split or cost recovery.

"We evaluate it for maximum results by considering input from stakeholders which we do pro-actively," he said.

Based on ESDM Ministry data, the total potential oil resources of the 10 oil and gas blocks are 3.44 billion barrels and 5 trillion cubic feet of gas. The five oil and gas blocks that are regularly auctioned are Merangin III Block in South Sumatra & Jambi (Onshore), Sekayu in South Sumatra (Onshore), North Kangean in East Java (Offshore), Cendrawasih VII in Papua (Offshore), and Mamberamo in Papua ( Onshore and Offshore).

Meanwhile, the five oil and gas blocks being auctioned with a direct bid mechanism are the West Palmerah Block in South Sumatra and Jambi (Onshore), Rangkas in West Java and Banten (Onshore), Liman in East Java (Onshore), Bose in East Nusa Tenggara (Onshore and Offshore). ), as well as Maratua II in Kaltara (Onshore and Offshore).

Investor Daily, Page-12, Thursday, August 6, 2020