With the transfer of management of the Rokan Block next year, PT Pertamina (Persero) will control 70% of the total national oil production. For this reason, Pertamina must be more aggressive in developing its oil and gas blocks in order to keep national oil production from falling significantly. Referring to Pertamina's data, as of last August, the realization of oil production from domestic assets was recorded at 314 thousand barrels per day (BPD).
When compared to the realization of national oil production in the same period of 706.9 thousand BPD, Pertamina's oil production portion is around 44.41%. With reference to the current Rokan Block oil production at 176,398 BPD, the company's oil production will increase to the level of 490 thousand BPD or about 70% of the national oil production of 706 thousand BPD.
Trisakti University Energy Observer Pri Agung Rakhmanto said, with the increasing number of national oil and gas blocks controlled, the number of operational activities that Pertamina is working on must be more massive. This needs to be done so that national oil production does not continue to decline.
"We have to allocate a lot of investment for the upstream business, both for exploration, development, EOR (enhanced oil recovery)," said Pri Agung.
This is because Pertamina's restructuring or company reorganization does not guarantee the improvement in the company's upstream operation performance. However, this restructuring should be used by Pertamina as an instrument to achieve corporate targets and maintain national oil production.
"In the context of maintaining national production, it means that it must be used as an instrument to facilitate the execution of more massive and aggressive upstream programs and investments," explained Pri Agung.
Dwi Soetjipto, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), also expressed a similar sentiment. The establishment of an upstream sub-holding by Pertamina should be able to improve the company's performance, especially in increasing national oil and gas production.
"We hope Pertamina will conduct a very aggressive and massive exploration in the future because the potential is still large," he said.
Pertamina's contribution to national oil production can be seen from at least six of the company's oil and gas blocks which are still on the list of the 10 largest oil producers in Indonesia. Even some of them, such as assets under PT Pertamina EP and the Mahakam Block, are the cornerstone of national oil production. Not to mention the Rokan Block as the second-largest oil producer whose management will shift to Pertamina next year.
"So we can see how we really hope that Pertamina plays a better role in the future," said Dwi.
In maintaining national oil production, Pri Agung added, it is not unlawful for the government to provide incentives for Pertamina, such as improvements to production sharing (split), tax relief, investment credit, accelerated depreciation, and others. However, this incentive must be balanced with strict requirements, for example, the determination of targets for drilling exploration and development wells, implementing EOR, the amount of oil and gas production, and adding oil and gas reserves.
"Any incentives should be given to Pertamina, as long as they are comparable to performance achievements. So, incentives or rewards are conditional and based on the achievement of measurable performance targets, "he explained.
Investor Daily, Page-10, Monday, Nov 2, 2020
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