Overcoming oil and gas BIG challenges in Indonesia

    The allure of upstream oil and gas investment in the country is increasingly attractive, as reflected in the commitment of a number of Cooperation Contract Contractors (KKKS) to continue investing in exploration activities.

    A number of global oil and gas giants have also agreed to achieve a large target of oil production of 1 million barrels per day (BPD) and gas of 12 billion standard cubic feet per day (BSCFD) by 2030.

    Through the signing of the Bali Commitment which was carried out at the CEO Forum at the 2023 International Convention on Indonesian Upstream Oil and Gas at the Bali Nusa Dua Convention Center, Badung Regency, Bali, Thursday, September 21. 

    The KKKS CEOs also promised to prepare a massive 2024 work program and budget, aggressive, and efficient. According to reviews by CEOs of international and national oil and gas companies, Indonesia is still an important portfolio. 

ENI ITALY

    Starting from oil and gas companies from Italy, namely ENI, ExxonMobil (United States), Petroliam Nasional Berhad or Petronas (Malaysia), Repsol SA (Spain), British Petroleum (England), to PT Medco Energi Internasional Tbk, and PT Pertamina ( Persero) invests more heavily in the oil and gas sector.

Roberto Daniele

    Director of ENI Muara Bakau BV, Roberto Daniele, said he was serious about investing more intensively in the exploration side of oil and gas fields. Currently, ENI together with PT Pertamina (Persero) have established strategic cooperation to carry out joint exploration in the Mahakam Block. 

the Mahakam Block

This collaboration is expected to increase oil and gas reserves. Roberto Daniele said ENI Muara Bakau BV is collaborating with Pertamina to explore the oil block in Mahakam to look for other oil and gas sources throughout Indonesia.

    Apart from that, ENI will also carry out more massive drilling for wells and exploration in the next 4 years. According to Roberto Daniele, this commitment shows Indonesia's important position in the company's portfolio. 

    Moreover, Indonesia still has large oil and gas reserves. Based on records from the Ministry of Energy and Mineral Resources, Indonesia's proven natural gas reserves even reach 41.62 trillion cubic feet (TCF). Apart from that, Indonesia still has 68 potential basins that have not been explored.

Carole Gall

    President of ExxonMobil Indonesia Carole Gall said that Indonesia has all the segments that ExxonMobil must offer. We have upstream and downstream such as fuel, lubricants, chemicals, and energy transition. Of all the Exxon affiliates in the world, it is rare to have all segments in one place together, but Indonesia has it all. 

    It is not surprising that ExxonMobil remains committed to continuing exploration investments in a number of fields and open areas. Carole Gall said ExxonMobil would drill again in Banyu Urip for 1.5 years.

    Nevertheless, a number of problems still confront the national upstream oil and gas industry, at least There are a number of crucial things that investors should note, including contract certainty, competitive and durable regulations, and ease of investing. 

    The Indonesian government is asked to increase the competitiveness of investment in upstream oil and gas by improving a number of fiscal and non-fiscal policies at a time of increasingly tight competition with a number of countries.

    In accordance with the above, Carole Gall asked the Indonesian government to improve the terms and conditions of upstream oil and gas, especially related to the terms and procedures for procurement of goods and services and auctions for oil and gas projects after approval of the Plan of Development/PoD for oil and gas fields have been obtained by the contractor. 

    According to Carole Gall, the process of procuring goods or auctioning oil and gas projects that is too long makes the return on investment and sustainability of the project unattractive for investors.

    Similar complaints were also made by other KKKS, including Petronas. This oil and gas company from Malaysia highlights the issue of certainty in contracts and fiscal terms in the oil and gas industry. 

Yuzaini Bin Md Yusof

    Petronas will support the Indonesian government to produce 1 million barrels of oil. Petronas Indonesia CEO Yuzaini Bin Md Yusof said Petronas would explore new areas in Indonesia.

INVESTMENT OPPORTUNITIES

Blogger Agus Purnomo in SKK MIGAS

    Meanwhile, Dwi Soetjipto, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK MIGAS), emphasized that Indonesia continues to Offer investment opportunities in the oil and gas sector and is ready to improve fiscal policy and provide various incentives. 

    Dwi Soetjipto said that in overcoming the energy trilemma, a broader collaborative effort is needed between the government, IOC, NOC, and policymakers, namely the Indonesian government. In line with this, investment support is needed so that exploration and development activities for oil and gas fields can be carried out on a massive scale.

    Responding to various input and complaints submitted by energy observer investors and founder of the ReforMiner Institute, Pri Agung Rakhmanto assessed the need for regulations regarding the latest time limit from processing to reaching the PoD approval decision. Pri Agung Rakhmanto said that the longer it takes, the relative economic value will decrease, and also increase the uncertainty factor if there is no decision immediately.

    Meanwhile, based on SKK MIGAS calculations, the oil and gas sector requires a very large investment of more than US$ 20 billion per year to support the 2030 oil and gas production target. Overall, the funding requirement reaches at least US$ 186.7 billion. to be able to achieve the oil production target of 1 million BOPD and natural gas 12 BCSFD by 2030.

Bisnis Indonesia ,Page-4-Saturday, Sept 23, 2023

Corruption Eradication Bureau Investigate BP's Gas Sale and Purchase Contract

    The government has approved the extension of the Tangguh Cooperation Contract (KKS Tangguh) to BP as the operator and partner of the Tangguh PSC for 20 years, from 2035 to 2055. 

BP

    The Tangguh project, which is being worked on by contractors (KKS) Berau, Muturi, and Wiriagar, produces liquefied natural gas (LNG).

    It's just that this contract extension was given earlier, giving rise to a polemic. Before his abdication, President Jokowi's administration was considered to be selling out contract extensions to a number of jumbo companies in order to guarantee long-term investment.

    Economist for Celios, Bhima Yudhistira, considers it strange to extend the contract earlier. Moreover, the contract extension occurred before the 2024 general election, causing various speculations.

    Deputy for Prevention of the Corruption Eradication Commission (KPK) Pahala Nainggolan revealed that his party had not received any news regarding the extension of the operating permit that had been granted. Even so, the KPK will explore the details of the gas sale and purchase contract in question.

Blogger Agus Purnomo in SKK Migas

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) confirmed that BP Berau Ltd's contract extension had complied with regulatory requirements. Head of SKK Migas Dwi Soetjipto explained, there are a number of provisions that allow for earlier contract extensions.

    Dwi said that a number of provisions included the commitment of a gas buyer as well as the potential for exploration and development. Acting Head of SKK Migas Program and Communication Division, Mohammad Kemal, said that BP Berau has the commitment to buy and sell gas, both in the domestic and foreign sectors.

"There are domestic buyers, namely the State Electricity Company (PLN), while exports are sold to China, Japan, and Korea," said Kemal.

    Kemal said that if you refer to the provisions, then the acceleration of the extension can be carried out if the Cooperation Contract Contractor (KKKS) has a Head of Agreement (HoA) or a letter of intent (LOL) to buy gas during the contract period. 

    Referring to the provisions of Minister of Energy and Mineral Resources Regulation No. 23/2021 concerning the Management of Oil and Gas Working Areas for Cooperation Contracts that Will End, contract extensions may be given earlier.

    In Article 4 Paragraph 3 of the regulation, it is stated that the application for a contract extension is submitted no earlier than 10 years and no later than 2 years before the contract ends. As for Article 4 Paragraph 4, requests for contract extensions can be faster than the 10-year time limit for contractors who are bound by a natural gas sale and purchase agreement. 

    The next paragraph states that the natural gas sale and purchase agreement includes a letter of intent, memorandum of understanding (MoU), head of agreement (HoA), or sale and purchase contract.

    BP's Tangguh PSC actually expires in 2035. Applications for contract extensions can generally be submitted no earlier than 10 years before the contract period ends or 2025. 

    BP Berau signed an amendment to the Gas Purchase Agreement (PjBG) with PLN in 2016. This is a follow-up amendment from the signature on October 17, 2014.

    The government has approved the extension of the Tangguh Cooperation Contract (KKS Tangguh) to BP as the operator and partner of the Tangguh PSC for 20 years, from 2035 to 2055. The Tangguh project, which is being worked on by contractors (KKS) Berau, Muturi, and Wiriagar, produces Liquified Natural Gas (LNG).

#BP, #SKKMIGAS

Kontan, Page-12, Tuesday, Dec 27, 2022

BP Brings Additional Investment

    The upstream oil and gas industry received good news from the extension of the Tangguh cooperation contract for 20 years because it presents an additional investment commitment of up to US$4.6 billion.

    The extension of the Cooperation Contract (PSC) for the Tangguh block allows BP and its partners to develop the Tangguh Liquefied Natural Gas (LNG) project until 2055. The Tangguh PSC area itself includes Wiriagar, Berau, and Muturi in Bintuni Bay, West Papua.

    In the Tangguh LNG Project, BP acts as the operator with a 40.22% ownership stake. Then MI Berau BV 16.3%, CNOOC Muturi Ltd. 13.90%, Nippon Oil Exploration (Berau) Ltd. 12.23%, KG Berau Petroleum Ltd. 8.56%, KG Wiriagar Petroleum Ltd. 1.44%, and Indonesia Natural Gas Resources Muturi Inc. 7.35%.

CNOOC

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif asked BP to immediately complete the Tangguh Train 3 Project, which is one of the national strategic projects in the upstream oil and gas sector. Because natural gas is considered a commodity that has an important role in the energy transition period towards net zero emission in 2060. 

    The extension of the Tangguh Cooperation Contract (PSC) also makes the availability of LNG to meet domestic and export needs more secure.

    Arifin Tasrif said we believe that gas will have an important role in achieving this target. Indonesia has great potential to produce gas in the future, therefore the government asks contractors to work together and develop the resources," said Arifin Tasrif.

    According to him, the government will support all efforts made by Cooperation Contract Contractors (KKKS) to optimize domestic resources. This also makes the government more open to cooperation in the management of upstream oil and gas in the country. For information, the Tangguh Train 3 Project is projected to be able to go onstream in the first quarter of next year.

    The target is that the project will produce 700 million standard cubic feet per day (MMSCFD) of gas and 3,000 barrels of condensate per day. 

    The investment required for the Tangguh Train 3 Project is estimated at US$8.9 billion. The Tangguh LNG project started in 2009 and has shipped more than 1,450 cargoes from the two LNG production trains that are currently operating, with a production capacity of up to 7.6 million tonnes of LNG per year.

Blogger Agus Purnomo in SKK Migas

    Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said that, in addition to providing certainty of gas supply, the extension of the Cooperation Contract (PSC) for the Tangguh block will also bring in an additional investment commitment of up to US$4.6 billion. In addition, it is also projected that the state will receive revenues of up to US$5.5 billion from 2035 to 2055.

"This contract extension also has a positive impact in the form of a contribution in driving the national and regional economies, as well as other multiplier effects," he said.

    According to him, the extension of the cooperation also reflects the government's commitment to continue to create a conducive investment climate, as well as provide certainty for investment activities in Indonesia. Moreover, Tangguh has been the largest gas producer in Indonesia, where around 20% of domestic gas production comes from the project. 

Anja-Isabel Dotzenrath

    Anja-Isabel Dotzenrath, BP Executive Vice President of Gas & Low Carbon Energy, said that the contract extension provides an opportunity for her party to continue the work that has been carried out together with the government and SKK Migas.

“This extension helps open up new opportunities for Tangguh's future,” said Anja-Isabel Dotzenrath.

    Anja-Isabel Dotzenrath said BP has a strong commitment to continuing long-term cooperation to meet energy needs in Indonesia.

"We look forward to further cooperation with Indonesia and our partners in the coming years," said Anja-Isabel Dotzenrath. 

Kathy Wu

    Meanwhile, BP Regional President Asia Pacific, Gas & Low Carbon Energy Kathy Wu said that the contract extension received by his party allows the company to continue accelerating domestic upstream oil and gas exploration activities.

"With the addition of our new blocks in Indonesia, this all shows our trust in the Government of Indonesia in continuing investment, and presenting various solutions to energy needs," said Kathy Wu.

    Apart from currently developing the Tangguh Train 3 project, BP and its partners have also started the Tangguh UCC Project which includes the development of the Ubadari Gas Field, enhanced gas recovery (EOR) through carbon capture, use, and storage (EGR/CCUS) in the Vorwata field, as well as onshore compression.

    Apart from the Tangguh LNG Project, BP also has interests in the Andaman II Block, as well as the Agung I and Agung II Blocks.

Gas needs

    On a separate occasion, the International Energy Agency (IEA) projects that gas power plants will still grow to replace the coal-based steam power plant (PLTU) in the net zero emission scenario.

    Until 2035, IEA predicts that gas will still be used to bridge the transition of global energy, especially when the transition from PLTU to new and renewable energy-based power plants (EBT). 

    In its research, the Reforminer Institute noted that the development of gas-based power plants has a number of advantages, such as capacity factor which is quite high and becomes one of the base load power plants, investment costs per megawatt (MW) for gas-based power plants are cheaper compared to the electric steam power plant (PLTU), geothermal power plant (PLTP), and Nuclear Power Plant (PLTN)

    Komaidi Notonegoro, Executive Director of the Reforminer Institute, said that oil and gas still have an important role in the Indonesian primary energy mix, and are projected to still be important up to 2050.

"Oil and gas shares in the Indonesian primary energy mix 2021 are around 51%, and in 2050 shares are projected to still around 44% of the total Indonesian primary energy consumption," he said.

    According to him, the National Energy General Plan (RUEN) also projects natural gas in the Indonesian primary energy mix in 2050 to be around 24%, the second largest after EBT. 

    From 2012-2021, the portion of gas utilization for domestic purposes increased by an average of around 1.50% per year.

    The industrial and fertilizer sector is recorded as a major contributor to increasing domestic natural gas consumption.

"The discovery of Indonesian oil and gas reserves in 2020-2021 was also dominated by natural gas, such as discoveries in Bronang-02, Wes EEL, Parang-02, Rembang-3B, and Wolai-02. 

    Candidates for the National Strategic Project of the Energy Sector 2020-2024 are also dominated and related to the use of natural gas, "he said.

    This makes natural gas have a more important role as a bridge in the implementation of fossil energy transitions to EBT. 

    Sugeng Suparwoto, Chairperson of Commission VII of the People's House of Representatives (DPR), said that oil and gas will still be an important sector of economic growth in Indonesia. For this reason, the government must think of ways to reduce emissions produced by fossil energy.

    He explained that the portion of EBT in the energy mix in 2050 was projected to be only 31%. That is, the remaining 69% will still be filled by fossil energy, fuel oil, coal, or natural gas.

"The world is also currently very dependent on fossil energy. This can be seen from OPEC+ which still produces around 100 million barrels of oil per day, "he said in an energy transition forum.

In an effort to reduce emissions from the oil and gas industry, the government can issue regulations related to the quality of fuel oil that is low in carbon and sulfur. That way, carbon emissions can still be reduced, without having to sacrifice the industry that has been a source of state revenue.

According to him, the upstream oil and gas industry must continue the exploration and exploitation of existing resources to ensure the meeting of community energy needs. 

    It's just that later the oil and gas produced should no longer become primary energy, but be processed into petrochemical derivative products.

    The reason is that Indonesia is still importing petrochemical products in very large quantities. During this time, only the fertilizer industry utilizes natural gas as raw material in the process of fertilizer production. 

    Another step that can be done is to optimize the use of natural gas as intermediate energy because the commodity is lower emissions. In addition, the use of natural gas can also reduce the import of liquefied petroleum gas (LPG) which has been burdening the state budget.

"The government must also be consistent in efforts to increase national oil and gas production, because until now there are still around 68 oil and gas basins that have not been managed, and most are natural gas," he said.

Bisnis Indonesia, Page-4,Monday, Dec 26, 2022

Phase II Oil and Gas Working Area Auction Brings US$ 14 Million Investment

    A total of four Working Areas (WA/WK) were offered in the Phase II Oil and Gas Block Auction which was held in 2021, all of which attracted investors, and resulted in an investment commitment of US$ 14.14 million and a Signature Bonus of US$ 1.2 million.

BP

    Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji, said that the working area auctioned, namely the North Ketapang Working Area, was won by Petronas Carigali Ketapang II Ltd., the Agung I Working Area was won by BP Exploration Indonesia Limited. 

Blogger Agus R Purnomo in Petronas Carigali Ketapang

    The Agung II Working Area was won by BP West Papua I Limited and the Bertak Pijar Quail Working Area was won by PT Mitra Multi Karya.

Auction For Oil and Gas Working Area Phase II 2022

    The investment details for the Firm Commitment and Signature Bonus are US$ 8.1 million and US$ 500 thousand for Petronas Carigali (PC) Ketapang. BP Exploration has a definite commitment of US$ 2.5 million and a Signature Bonus of US$ 100 thousand. Then the BP West Papua Definite Commitment investment is US$ 1.5 million and the Signature Bonus is US$ 100 thousand.

    Meanwhile, Mitra Multi's Fixed Commitment investment is US$ 2 million and the Signature Bonus is US$ 500 thousand. Tutuka said that he was very interested in the Working Area auction this time, giving a positive signal for Indonesia's upstream oil and gas investment at a time of challenging global conditions. 

    In the next stage after the announcement, the Government will send an official notification of the winner and the winner of the auction must submit this letter of intent within 14 working days of receiving the notification of the winner.

    In accordance with the Regulation of the Minister of Energy and Mineral Resources Number 35 of 2021, the signing of the Cooperation Contract is carried out no later than 60 calendar days from the announcement of the winner today.

"For this reason, we hope that the winning bidders can immediately prepare the required documents for signing the KKKS," he said.

Regarding Offer privileges

    Participating Interest 15% PT Pertamina (Persero), Pertamina gets 15% Participating Interest Offering Shares in accordance with the provisions in the Bid Document in accordance with the ESDM Ministerial Regulation Number 35 of 2021, the Government will also submit this to Pertamina.

    In addition to the announcement of the Working Areas, there is currently a Regular Auction for the Oil and Gas Working Area Phase II 2021 which consists of four Working Areas, namely Karaeng, Maratua II, Pope, and West Palmerah. The schedule for access to Bidding Documents is still open until March 24, 2022, while the submission of Participation Documents is from March 24 to 25, 2022.

    Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji, said that the working area being auctioned, namely the North Ketapang Working Area was won by Petronas Carigali (PC) Ketapang II Ltd, and BP Exploration Indonesia Limited won the Agung I Working Area. The Great II Working Area was won by BP West Papua I Limited and the Pijar Puyuh Bertak Working Area was won by PT Mitra Multi Karya.

Investor Daily, Page-10, Monday, March 21, 2022

FRESH WIND FROM PETRONAS AND BP

 

    The national upstream oil and gas industry gets fresh air from the commitments of Petronas and BP in three of the four work areas offered by the government through the Ministry of Energy and Mineral Resources.

BP

    The inclusion of Petronas and BP in the Working Areas (WK) or oil and gas blocks North Ketapang, Agung I, and Agung II is considered as the success of the government is seeking to improve the investment climate in the country.

    Moshe Rizal, Executive Director of the Association of National Oil and Gas Companies (Aspermigas), said Petronas in the North Ketapang WK, and BP in the Agung I and Agung II WKs is a good thing. The reason is that the two companies are large National Oil Company (NOC) and International Oil Company (IOC).

Blogger Agus Purnomo in Petronas PC Ketapang 

"We hope like that, we will see the realization in the next three years," he said.

    Moshe also hopes that the government will continue to support oil and gas companies in realizing their investment in the country, especially when conducting exploration activities.

"The challenges that will be faced are both technical and non-technical, and the exploration stage is always the riskiest period."

    When announcing the winner of the direct bid bidding for the oil and gas Working Area phase II 2021, Director General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM) Tutuka Ariadji said that the terms and conditions offered by the government this time received a good response from the cooperation contract contractors or KKKS.

“We also received input from KKKS that the terms and conditions offered in this auction are very attractive, and their terms are solid. We can see that in Working Area with high risk, the split can be up to 50-50, and if the risk is reduced, the government's share will be bigger," he said.

    He said the government would seek to improve the investment climate in the national upstream oil and gas industry and offer 17 other Working Areas this year.

    To note, the government received a definite investment commitment of US$14.14 million from Petronas, BP, and Mitra Multi Karya in the auction. In addition, there is also a signature bonus of US $ 1.2 million obtained by the State.

Working Area Ketapang Block Petronas 

    In detail, Petronas through PC Ketapang II Ltd. will conduct a G&G study at WK North Ketapang with a budget of US$1 million, 3D seismic covering an area of ​​300 square kilometers worth US$6.39 million, multi-client uplift fee from 3D seismic covering an area of ​​​​262 square kilometers US$750,000, and a signature bonus of US$500,000

    In WK Agung I, BP through BP Exploration Indonesia Limited will conduct a G&G study with a budget of US$500,000, 2D seismic covering an area of ​​2,000 square kilometers worth US$2 million, and a signature bonus of US$100,000. As for WK Agung II, BP through BP West Papua I Limited is ready to conduct a G&G study worth US$500,000, 2D seismic covering an area of ​​2,000 square kilometers with a value of US$1 million, and a signature bonus of US$100,000.

    Then Mitra Multi Karya will do a workover of eight wells with a budget of US$2 million, and a signature bonus of US$500,000.

    Tutuka said that the investment commitments from the three companies were a positive signal for national upstream oil and gas investment in times of challenging global conditions.

Blogger Agus Purnomo in SKK Migas

FULL SUPPORT

    Head of SKK Migas Dwi Soetjipto ensured that his party will provide full support so that the management of the North Ketapang Working Areas (WK) ​​can run smoothly until new reserves are found.

    According to him, the election of Petronas as the manager of North Ketapang shows that Indonesia's upstream oil and gas investment is still attractive to world-class investors.

“Petronas is one of the largest oil and gas companies in the world. With the additional investment in Indonesia, hopefully, this will be able to attract other world-class investors to follow Petronas' footsteps."

    Petronas Executive Vice President and Chief Executive Officer of Upstream Adif Zulkifli said his party was very happy with the results of the auction. Moreover, Working Areas (WK) North Ketapang is located close to where the company discovered oil reserves last year.

"We will continue to strengthen our upstream oil and gas business to provide value and contribute to the development of the energy industry in Indonesia. As a progressive energy and solutions partner, Petronas is committed to providing Indonesia with a safe and reliable energy supply," he said.

    Separately, BP through its official statement stated that Working Areas (WK) Agung I and II are unexplored areas. The two Working Areas (WK) with very significant gas sources are close to the increasing demand for gas.

"The addition of Agung I and Agung II Blocks to our portfolio reflects our ongoing commitment to invest and grow our business in Indonesia," said BP Regional President Asia Pacific Nader Zaki.

Bisnis Indonesia, Page-4, Monday, March 21, 2022

Ukraine Crisis Turns Into Energy War

 

    The Ukrainian crisis, which was actually a cooperative relationship between the United States and Russia, turned into an energy war. After being subjected to a barrage of economic sanctions, Russia is now retaliating.

    The Ukrainian crisis that took place with dozens of economic sanctions from Western countries on Russia developed into an "energy war". The United States stops energy imports from Russia. In return, Russia will also retaliate for its energy exports to America and Europe.

    President of the United States (US) Joe Biden in Washington DC, Tuesday (8 March 2022) UTC time or Wednesday (9 March) West Indonesia time, announced the termination of all imports of oil, gas, and coal from Russia to his country. This he called as part of pressure for Russia to stop attacks on Ukraine. Similar moves are being planned by two UK-based oil giants, BP and Shell.

BP

“We banned all imports of Russian oil, gas, and energy. This means Russian oil is no longer welcome at US ports," Biden said.

sHell

    The move immediately responded to Russian President Vladimir Putin by banning the export and import of raw materials and a number of other goods. In Moscow, Putin issued a decree banning the export and import of raw materials to ensure the safety and sustainability of the industry in Russia. The policy is temporarily implemented until December 31, 2022.

Government and parliament

    Russia will soon decide on commodities that are on the banned list. Moscow ensures there will be no ban on private consumption. The prohibition only applies to industrial consumption. 

Alexander Novak

    Before the decree was announced, Russian Deputy Prime Minister Alexander Novak announced that Russia had the right to deliver gas to Europe. However, he said the termination would be detrimental to all parties.

    Previously, the Ukrainian crisis had raised oil prices above 100 US dollars per barrel. However, with the announcement from Washington and Moscow, world oil prices skyrocketed. The price of Brent crude oil had reached the price level of 130.38 US dollars per barrel.

    Meanwhile, West Texas Intermediate oil price reached 125.58 US dollars per barrel.

    The increase in oil prices always raises the prices of other global commodities. This is also what is currently happening. For example, nickel and tin are widely owned by Indonesia the price rose more than 4 percent. The metal price increase was also noted in palladium, very important in the semiconductor industry. As much as 40 percent of the world's supply comes from Russia.

Fatih Birol

    Oil prices were discussed at an energy conference in Paris. Executive Director of the Energy Agency (IEA) Fatih Birol said the IEA could release more international sugar oil stocks creating fuel prices. The IEA represents 31 industrialized countries. Russia is not included.

    The Executive Director of the Reforminer Institute, Komaidi Notonegoro, said the increase in oil prices would further depress the balance of the national oil and gas trade. This is because Indonesia is an importer of clean oil and national energy consumption for oil and gas reaches 51 percent. 

    In the end, the oil and gas trade balance deficit will get bigger. In fact, additional foreign exchange earnings from rising commodity prices. Komaidi is worried that he will not be able to cover the need for additional foreign exchange to finance oil and gas imports.

    As an illustration, the need for foreign exchange for imports of oil and gas can reach around 49.27 billion US dollars assuming an oil price of 120 US dollars per barrel. The needs consist of imports of oil and fuel products worth 44.04 billion US dollars and LPG imports worth 5.23 billion US dollars.

"With such an illustration, foreign exchange needs for oil and gas imports could reach almost 35 percent of Indonesia's current foreign exchange reserves, which are recorded at around US$ 141 billion," he said.

    In fiscal matters, Komaidi is of the opinion that every increase in the oil price of 1 US dollar per barrel will increase oil and gas revenues in the 2022 State Budget (APBN) by around Rp. 3 trillion. However, when the price of oil increases, it will also increase the need for additional subsidies and compensation for oil and gas in larger amounts.

    Furthermore, he added, rising prices triggered by geopolitical conflicts and wars now confirm that even in a transition era, energy, security of oil and gas supply are major issues that cannot be ignored.

    Separately, the Institute for Essential Service Reform (IESR) Transformation Program Manager, Deon Arinaldo, said that when gas supplies from Russia were hampered, European countries would start thinking about not focusing on energy commodities. Indonesia can make an energy transition. However, the challenge for Indonesia is to attract new and renewable energy investments into the country.

“There are many business/industry players who are willing to invest in renewable energy, they just need how the government can facilitate it. It is time for the energy transition to be seen as a strategy for development and economic growth," he said.

Kompas, Page-1, Thursday, March 10, 2022

The Economy is a Challenge for the CCUS Upstream Oil and Gas Project

 

The implementation of carbon capture, utilization, and storage (CCUS) technology is the key to reducing emissions in the upstream oil and gas industry to be in line with global low-carbon initiatives. However, economic factors pose a challenge to the use of this technology. 

BP

    Vice President of Subsurface Asia Pacific & India BP Dan Sparkes said the technology factor is no longer a challenge for the implementation of CCUS in the upstream oil and gas industry. This is because the upstream oil and gas industry has experience in injecting CO2 into the bowels of the earth. The main challenge in implementing this CCUS is its economy.

“I think the first thing that must be done for the project to operate is to seek profit from this project (CCUS). Enhanced oil recovery (EOR) based on CO2 is the easiest example," he said at The 2nd International Convention on Indonesian Upstream Oil and Gas 2021 in Bali, Monday (29/11).

Another example is the CCUS Project in the Tangguh Liquefied Natural Gas/LNG refinery complex which is managed by his party. In the refinery project, carbon capture facilities are available, so the expensive investment requirements of the CCUS project have actually been paid for.

"So this kind of project does not need as many incentives as CCUS projects in new oil and gas fields," said Sparkes.

Another thing that can be done to attract investors to work on this CCUS is to set a price for carbon emissions. Not only attracting investors, but the pricing of carbon emissions will also help CCUS projects that are on the verge of the economic threshold.

"So that it can fulfill the economy at a cheaper price," he added.

Blogger Agus Purnomo in SKK Migas

Regarding the implementation of CCUS, the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto revealed that his party is ready to provide support in the form of incentives according to the needs of each CCUS project.

The reason is, cutting carbon emissions has become a policy of the Government of Indonesia, so it must be carried out. He admits that the economy is indeed the key to the CCUS project or not. However, his party will ensure that other costs other than the need for CCUS technology must be as efficient as possible.

“Capex (capital expenditure) apart from low-carbon initiatives, must be really efficient. So, if CCUS is added, the economy can still be maintained. But if it is maximal, it is impossible to operate without incentives, as a consequence, it must provide incentives, "explained Dwi.

Indonesia has great potential for carbon capture. This is because many oil and gas reservoirs have started to run out of reserves. This reservoir can be used to store carbon emissions captured using CCUS technology. His party is mapping out which oil and gas fields can be the location of this CCUS.

"This can be offered to countries near the location to be able to use the storage, as well as to other industries. So if the gas is empty, we can sell storage, "he explained.

Already Rolling

The Ubadari Field development project and the Vorwata Carbon Capture Utilization and Storage (CCUS) project carried out by BP Berau Limited are some of the CCUS projects already underway in Indonesia. According to Deputy Head of SKK Migas Fatar Yani Abdurrahman, the Plan of Development/POD for the project was approved some time ago. Now, his party has signed a memorandum of understanding with BP to ensure this project takes place.

"With the memorandum of understanding, it will accelerate the approval for BP to reach the FID (Final Investment Decision)," he said.

He explained that with the memorandum of understanding lasting for one year, his party hoped that an agreement could be reached with BP so that the CCUS project could be implemented.

"This CCUS is still new, so we really have to study what can be applied again, we are looking for the right way and technology," added Fatar.

Investor Daily, Page-10, Tuesday, Nov 30, 2021

SKK Migas Take Advantage of the Time Left

    Although less than 10 years are left, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that it would continue to strive for oil production of 1 million barrels per day and 12,000 MMscfd of gas by 2030. 

Blogger Agus Purnomo in SKK Migas

    Head of Program Coordinator for the 2nd International Convention on Indonesian Upstream Oil and Gas 2021 Rikky Rahmat Firdaus said that the 2030 target is a big challenge for the upstream oil and gas sector in the next 9 years.

"Nine years isn't that long actually. To obtain oil and gas, it requires survey activities to drill. This will take time, so we must carry out activities from now on to achieve these targets,” he said.

    SKK Migas and cooperation contract contractors (KKKS) have made a number of efforts to achieve this target. First, optimizing production from existing fields and maintaining existing production.

"The current state budget in 2021 will reach 705,000 barrels per day. This target alone is already a challenge," he added.

    Second, chemically enhanced oil recovery (EOR) to obtain new oil reserves. Most recently, SKK Migas approved the plan of development (POD) for the Ubadari Field and Vorwata Enhanced Gas Recovery (EGR) in the Berau, Muturi, and Wiriagar working areas operated by BP Berau Ltd. This agreement resulted in additional reserves of 1,523 Bscf of gas or equivalent to 271.96 million barrels of oil.

BP Berau Ltd

“Furthermore, third, increasing oil and gas exploration with planned and in-depth and efficient studies. Then the G&G survey that we are doing with KKKS is carried out," he explained.

Energy and Mineral Resources (ESDM)

    Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM) Tutuka Ariadji stated that special steps were needed to achieve the oil and gas production target.

"If efforts are not made to prevent production from falling, by 2030, oil production could only be around 300,000 barrels per day. The strategy needs to be taken seriously," said Tutuka.

    Meanwhile, the government also stated that the development of oil and gas infrastructure will still be aggressive in the future. This is to support the increase in production that has been planned to meet domestic supply.

    Tutuka said there are 42 upstream oil and gas projects in Indonesia for the period 2021 to 2027 which are expected to produce 1.1 million barrels of oil equivalent per day with an investment of around US$43.3 billion.

Bisnis Indonesia, Page-4, Thursday, Nov 18, 2021