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

ICDCJ Convention 2021 of Upstream Oil and Gas Sector Get Investors

 

The implementation of the 2nd International Convention and Indonesian Upstream Oil and Gas 2021 (IOG 2021) is a potential event to attract investors in the upstream oil and gas sector. In this event, the government auctioned eight oil and gas blocks through two schemes, namely direct bidding and regular auctions.

I believe this convention can attract investors in the upstream oil and gas sector. It's not easy, but the steps in that direction are already there," said Chairman of the IOG 2021 Organizing Committee Lucky Agung Yusgiantoro on the sidelines of holding the 2021 IOG Convention at the Bali Nusa Dua Convention Center (BNDCC), Monday (29/11).

According to him, currently, Indonesia needs large amounts of investment in order to achieve the government's target of producing 1 million barrels of oil per day (BOPD) and 12 billion standard cubic feet of gas per day (BSCFD), by 2030.

The convention, themed Progressing Towards 1 Million Barrel of Oil per Day and 12 Billion Standard Cubic Feet Per Day, was opened by Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan, attended by Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif, Minister of Investment/Head of Coordinating Board Investment (BKPM) Bahlil Lahadalia, Deputy Minister of Finance Suahasil Nazara, and Head of SKK Migas Dwi Soetjipto.

Blogger Agus Purnomo in SKK Migas

Lucky, who is also the Chief Environmental Expert of SKK Migas, stated that in an effort to meet national energy needs, SKK Migas has set a long-term vision for the upstream oil and gas industry, in the form of achieving a production target of 1 million barrels of oil per day and 12 billion standard cubic feet of gas per day by 2020 the year 2030.

To achieve this target, SKK Migas has established a strategic plan for Indonesian Oil and Gas 4.0 which serves as a guide for actors in the upstream oil and gas sector, such as optimizing existing fields for field development plans, accelerating the transformation of resources into production with good supervision and control at each stage. field development plans, as well as accelerating Chemical Enhanced Oil Recovery in contributing to the addition of national oil production.

"The 2021 IOG Convention is an effort by SKK Migas in disseminating information about Indonesia's target of meeting energy needs from the oil and gas sector. We continue to spread the news that we are aiming to achieve that target,” said Lucky.

Auction of 8 Oil and Gas Blocks

Meanwhile, on the same occasion, the Ministry of Energy and Mineral Resources (ESDM) again opened auctions for eight oil and gas blocks this year, of which three are gas blocks. The total resources for these eight oil and gas blocks are estimated at around 500 million barrels for oil and 22.65 Trillion Cubic Feet/TCF for gas. Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji, said that the eight oil and gas blocks were offered through two schemes, namely direct bidding and regular auctions.

"A total of 4 oil and gas blocks were offered with a direct bidding scheme and 4 blocks through regular auctions," he said.

Four oil and gas blocks are offered through this direct offer, namely the Bertak Pijar Puyuh Block with potential resources of 1.38 million tank barrels in South Sumatra, North Ketapang 270.08 million barrels, and 1,589.81 Billion Cubic Feet/BCF off the coast of East Java. , Agung I 985 BCF off the coast of East Java and Bali, and Agung II 16.5 TCF off the coast of East Java, South Sulawesi, and West Nusa Tenggara.

Next, four oil and gas blocks are regularly auctioned, namely West Palmerah Block with potential resources of 71.7 million barrels and 270.9 BCF in South Sumatra and Jambi, Pope 2,555.78 BCF off the coast of Natuna, Maratua II 107.06 million barrels. and 556.77 BCF in North Kalimantan, and Karaeng 64.2 million barrels and 182.08 BCF in South Sulawesi.

"Especially for the Bertak Pijar Quail Block, this is an exploitation block that has ever been produced," said Tutuka.

In this auction, his party offered better terms and conditions for the auction. One of them is the improvement of profit sharing (split) for the cooperation contractors who are determined to take into account the risk factors in the related oil and gas block.

Next, the signature bonus is open for bidding without a minimum limit, First Tranche Petroleum (FTP) is reduced to 10%, and the implementation of the Domestic Market Obligation/DMO obligation price of 100%.

Then, just like the first stage of the auction, oil and gas companies can choose the form of Production Sharing Contract/PSC between cost recovery and gross split. Others, there is no refund of part of the work area (relinquishment) in the third year of the contract and ease of accessing data through the Migas Data Repository (MDR) membership mechanism.

"As well as providing incentives and tax facilities according to applicable regulations," said Tutuka.

The government invites oil and gas companies that have the financial and technical capabilities, are able to meet the minimum requirements for definite commitments, as well as the terms and conditions of the auction, as well as have good performance and track record to be able to participate in the auction of this oil and gas block. For auctions through direct bidding, access to auction documents is open from November 29, 2021, to January 11, 2022.

Furthermore, the submission of participation documents can be done until January 12, 2022. For regular auctions, access to tender documents is open from November 29, 2021, to March 24, 2022, while the submission of participation documents is no later than March 25, 2022.

Optimistic

Deputy Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Fatar Yani Abdurrahman added that the response of oil and gas companies to the second phase of the auction of oil and gas blocks was very positive. This is because the fiscal provisions offered in the auction are very attractive, especially the split for contractors. In addition, the oil and gas reserves of several blocks being auctioned off are also very large.

“For example, the Agung Blocks I and II, which have large reserves of around 2-3 TCF, are also fiscally attractive. Judging from this, we are optimistic that there will be a new contract signing," said Fatar Yani.

Director and Chief Operating Officer of PT Medco International Tbk Ronald Gunawan assessed that the provisions used in the second phase of the oil and gas block auction were an innovation. One of them is related to profit sharing, it seems that the government is no longer guided by the provisions for profit sharing of 85:15 for oil and 70:30 for gas.

"Hopefully, with this new oil and gas block with breakthrough terms and conditions, it will attract more investment," he explained.

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

Termination Block Managers Can Propose Changes in the Form of Oil and Gas Contracts

    Oil and gas companies that hold the management of terminated oil and gas blocks are allowed to propose changes in the form of production sharing contracts (PSC) from gross profit sharing (gross split) to cost recovery or vice versa.

ESDM

    This refers to the Regulation of the Minister of Energy and Mineral Resources (EMR/ESDM) Number 23 of 2021 concerning the management of oil and gas blocks whose cooperation contracts will expire. With the enactment of this regulation, the Minister of Energy and Mineral Resources Regulation No. 23/2018 and the Minister of Energy and Mineral Resources Regulation No. 3/2019 are revoked and declared invalid.

    In Article 34 of Ministerial Regulation number 23 of 2021, it is stated that contractors and PT Pertamina (Persero) can apply for proposals for the basic forms and provisions of PSC from gross split to cost recovery or from cost recovery to gross split. This application can be made after the contractor and Pertamina have completed a five-year definite work commitment (KKP).

Blogger Agus Purnomo in SKK Migas

    The application is submitted to the Minister of Energy and Mineral Resources through the Special Task Force for Oil and Gas Business Activities (SKK Migas). Furthermore, if there is a change in the form and basic provisions of the PSC, the costs incurred for the implementation of the KKP cannot be submitted as a refund of operating costs.

    The opportunity to change the PSC scheme is considered positive by various parties, including PT Pertamina Hulu Energi (PHE) as the Upstream Subholding of PT Pertamina (Persero). Pertamina Hulu Energi Corporate Secretary Whisnu Bahriansyah said the option to choose the gross split or cost recovery oil and gas contract was previously only given for new oil and gas block contracts. This provision is through the Regulation of the Minister of Energy and Mineral Resources number 12 of 2020.

    But now, the same option is also owned by the terminated oil and gas block manager who has signed a contract. "Article 34 answers the industry's encouragement for the flexibility of the existing cooperation contract scheme options," he said.

    Secretary-General of the Indonesian Association of Petroleum Engineers (IATMI) Hadi Ismoyo agrees that this flexibility in choosing the form of PSC has a positive impact on the national oil and gas investment climate. 

    The reason is, so far not all investors are compatible with the gross split PSC. He said that the implementation of the gross split contract had an impact on the cash flow of oil and gas companies. This is because cost recovery PSCs are guaranteed a faster return on investment than gross split PSCs.

"So that investors are more comfortable, and because investors feel comfortable, it can also be returned in the form of exploration activities in the area, so that in the long term there is hope for sustainable production," he said.

    The Executive Director of the Reforminer Institute, Komaidi Notonegoro, also said the same thing. The no longer mandated gross split scheme oil and gas contracts for terminated oil and gas blocks is a positive step. His party from the beginning has also suggested that KKKS be given the freedom to have the most suitable oil and gas contracts for the oil and gas blocks they manage.

"Because there are types [of oil and gas blocks] that are suitable for cost recovery and some are suitable for gross split, so they cannot be mandated for certain types," he explained.

    Regarding the implementation of the Ministerial Regulation, the Head of the Program and Communication Division of SKK Migas Susana Kurniasih said, the PSC that first regulated the KKP matter was for the Jambi Merang Block which became effective in 2019. With the implementation period of the KKP for five years, it will be completed in 2024.

“SKK Migas through functions that have main tasks, functions, and competencies will monitor the implementation of the KKP by KKKS. In the event that after the completion of the KKP, the contractor intends to apply for a change in terms and conditions, then the policy to decide on the application is entire with the Minister of Energy and Mineral Resources,” She said.

    She added that SKK Migas had submitted a recommendation on an application from the Brantas Block contractor who submitted a contract change from gross split to cost recovery before the enactment of ESDM Ministerial Regulation number 23 of 2021.

"However, the application in question was not approved by the Minister of Energy and Mineral Resources," said Susana.

    Previously, termination of oil and gas blocks was mandated using a gross split contract. To date, referring to data from the Ministry of Energy and Mineral Resources, there are 23 terminated oil and gas blocks that use gross split contracts, namely the Offshore North West Java (ONWJ), North Sumatra Offshore, Ogan Kome ring, South East Sumatra, Tuban, Sanga-Sanga, East Kalimantan. and Attaka, Jambi Merang, Raja/Pendopo, Bula, Seram-Non Bula, Malacca Straits, Brantas, Salawati, Bird's Head, Rokan, Tarakan, Coastal Plains and Pekanbaru (CPP), Tungkal, Sengkang, Rimau, Corridor, and Pangkah.

Investor Daily, Page-10, Monday, Aug 23, 2021

PLN DOMINATES ROKAN'S ELECTRICITY SUPPLY

    PT PLN (Persero) is preparing to control the electricity supply for the Rokan Block after signing a share purchase agreement with PT Mandau Cipta Tenaga Nusantara MCTN), which has been supplying energy for the legendary oil and gas working area.

    PLN President Director Zulkifli Zaini said that with this signing, 100% of PT Mandau Cipta Tenaga Nusantara (MCTN) shares will be owned by PLN. Meanwhile, MCTN is an electricity company owned by Chevron Standard Limited (CSL).

    Through this acquisition, PLN will utilize the gas power plant (PLTG) North Duri Cogen with a capacity of 300 megawatts (MW) previously owned by MCTN to ensure the availability of electricity and steam supply to the Rokan Block during the transition period.

"We will supply electricity and steam to the Rokan Working Area from the PLN side in two stages," he said.

The Rokan Block Chevron

    First, short-term power supply. After the acquisition of MCTN shares, the company's operations will continue for a 3 year transition period. Second, the supply of electricity for the long term. PLN will interconnect the electricity system in the Rokan Block with the Sumatra electricity system.

    PLN's Director of Commerce and Customer Management Bob Sariel said the acquisition was very important for the operation of the Rokan Block. This is done to ensure that the electricity supply does not stop after the transfer of management of the Rokan Block from PT Chevron Pacific Indonesia (CPI) to PT Pertamina Hulu Rokan on August 8, 2021.

PT Chevron Pacific Indonesia (CPI)

“If you want to build a network, it takes 2 years to replace the object or 1 year to relocate. If there is a 1.5-year time lag that causes electricity to be unable to flow to Rokan, of course, the oil Working Area in the Rokan Block will experience a decrease in production, "he said.

    In addition, the acquisition decision is also considered to be better than just entering into a power purchase contract with MCTN or renting the power plant. Moreover, MCTN is the only one that can supply electricity to the Rokan Block.

    After a 3-year transition period, the Rokan Block's electricity needs will be supplied from a more reliable Sumatran electricity system. According to Bob, Sumatra's electricity system has a very strong supply with supplies from a number of steam power plants (PLTU), hydroelectric power plants (PLTA), and geothermal power plants (PLTP) in the region. Currently, the company is building a 500 kV transmission network to strengthen Sumatra's electricity system.

    Regarding investment to support electricity supply to the Rokan Block, PLN has allocated around Rp11 trillion. However, Bob has not been able to reveal more details about the acquisition value of MCTN shares on the grounds that they are still bound by a non-disclosure agreement (NDA). 

    The contents of the MCTN share sale and purchase agreement can only be opened after the administrative and financial processes are completed approximately 1 month after the signing of the share purchase agreement. What is clear, the acquisition funds will come from internal PLN.

Jennifer Ferratt

    Regional Director of Chevron Standard Limited Jennifer Ferratt said that with the completion of the share sale and purchase process, the company is committed to creating a smooth transition in MCTN and in line with the transition of the Rokan Block to Pertamina Hulu Rokan (PHR).

"We would like to thank PLN for working with CSL to achieve fair and mutually beneficial results," said Jennifer.

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif added that the Rokan Block has huge potential for oil reserves. Therefore, to be able to provide maximum benefits for the country, a good strategy is needed.

"PLN must ensure a guarantee of electricity supply for the Rokan Block so that Pertamina is able to maintain the sustainability of the production of 25% of the national oil," he said.

    Meanwhile, Deputy Minister I of SOEs Pahala Nugraha Mansury hopes that the follow-up to this sale and purchase agreement will run smoothly and in tandem with the management transfer process which will take place soon.

“The Rokan Block is very strategic for Indonesia because it produces 25% of the national oil production. So far, the majority of electrical energy has been supplied by power plants owned by MCTN, so this agreement is very important to ensure the supply of electricity for the Rokan Block in the future," said Pahala.

    Meanwhile, the acquisition of MCTN shares is a follow-up to the cooperation agreement between PLN and Pertamina Hulu Rokan which was included in the memorandum of understanding for the cooperation in providing electricity and steam in the Rokan Working Area on December 30, 2020, and the sale and purchase agreement for electricity and steam on January 29. 2021.

Pertamina Hulu Rokan (PHR)

BUSINESS EFFICIENCY

    President Director of Pertamina Hulu Rokan (PHR) Jaffee A. Suardin said with this commitment, Pertamina's position would be even stronger because it had ensured the continuity of the Rokan Block's operational activities.

"The presence of PLN for electricity in the Oil Working Area in the Rokan Block is a form of good BUMN synergy, with the hope of increasing business efficiency, especially related to electricity and steam costs which can be more economical and efficient, so as to be able to support the development of Pertamina Hulu Rokan (PHR) oil wells." Pertamina Hulu Rokan (PHR) with better economies of scale," he said.

    Meanwhile, the demand for electricity and steam in the Rokan Block Oil Working Area is 400 MW and 335,000 barrels of steam per day (Mbspd). Most of these needs are supplied from the 270 MW and 265 Mbspd MCTN plants and the remaining needs are met from the Rokan Block Oil Working Area internal generator.

    The electricity and steam supply is to maintain the continuity of oil production in the Rokan Block Working Area which is expected to be maintained at around 160,000 thousand barrels per day this year with the addition of new wells being drilled. Currently, the Rokan Block production is recorded at 162,951 barrels per day, which is the second-largest production after the Cepu Block in East Java, Indonesia.

    Energy Watch Executive Director Mamit Setiawan explained that the process of signing a share purchase agreement between PLN and MCTN was a new step in the Rokan Block transition process. According to him, through this process, the problem of electricity and steam supply for the Rokan Block can be resolved in the future.

"SOE synergy between Pertamina and PLN is a strategic step in developing and helping fellow SOEs considering the Rokan Block is the backbone of national oil production," said Mamit.

Bisnis Indonesia, Page-4, Wednesday, July 7, 2021

Increase Investment, Ministry of ESDM Continues to Improve Oil and Gas Data

    The Ministry of Energy and Mineral Resources (ESDM/EMR) continues to improve the subsurface data for oil and gas blocks to attract investment. The reason is that the completeness of the data will increase Indonesia's competitiveness in attracting oil and gas companies to invest in Indonesia.

ESDM

    Head of the Center for Data and Information Technology at the Ministry of Energy and Mineral Resources (EMR/ESDM), Agus Cahyono, said that the ministry has opened access to oil and gas data for potential investors to attract investment. 

    Completeness of data is also the focus of the ministry. One of them is that the data's completeness can make it easier for potential investors to process 2D seismic data into 3D as strong.

"With more complete data, it provides convenience and completeness for potential investors to conduct regional studies," he said during an online discussion on Ease of Investment and Information Services in the Energy and Mineral Resources Sector held by the Ministry of Energy and Mineral Resources (ESDM/EMR).

    Currently, his party continues to collect seismic data from oil and gas blocks throughout Indonesia. However, he admits that there are indeed obstacles related to data processing, especially those that are still stored in round tape form. The success of reading data on the media is fairly low.

“Really have to be careful and have to go back and forth to retrieve data. And this is a lot of round tape data,” said Agus.

    In addition, he said that data improvement could be pursued from the realization of definite Work Commitments (KKP) promised by oil and gas companies when signing the Production Sharing Contract (PSC). KKP funds can now be used to conduct exploration in open areas, not limited to oil and gas blocks operated by oil and gas companies.

    Pertamina Hulu Energi (PHE) has completed a 2D seismic survey along a length of 32,200 kilometers (km). Currently, the resulting data is being processed through Pseudo-3D Seismic Reprocessing. 

Blogger Agus Purnomo in SKK Migas

    SKK Migas noted that there is exploration potential for Deltaic Deepwater Play in the South Makassar Strait Basin, Pre-Tertiary Play in the North East Java-Makassar Strait Basin, and others. This data will also be open to the public in the future.

ENI

    Not long ago SKK Migas also signed an upstream oil and gas exploration cooperation with ENI. With this technology collaboration, SKK Migas hopes to has new oil and gas prospects.

    Regulatory Affairs Committee Indonesian Petroleum Association (IPA) Prana Raditya said oil and gas companies were greatly helped by the government's policy of opening up national oil and gas data. He hopes that the subsurface data on oil and gas blocks can be improved in quality and quantity so that it will increase oil and gas business actors to invest in Indonesia.

“In terms of data, Indonesia is currently competing with other countries. So, the more, complete, and good quality data that can be provided for business actors review, the more attractive Indonesia will be for business actors at home and abroad," he said.

    Thus, the completeness of the data also helps to achieve the target of oil production of 1 million barrels per day (BPD) and gas of 12 billion cubic feet per day by 2030. These data on oil and gas blocks are summarized in the Oil and Gas Data Repository (MDR). 

    Not only data related to oil and gas potential in one area but the MDR is also equipped with supporting data, such as area boundaries, availability of age infrastructure, geological vulnerability, to whether it is included in forest land. Investors can access all the data for free by registering to become a member.

Investor Daily, Page-10, Wednesday, July 7, 2021

Merakes Project Ready to Supply Domestic Gas

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif inaugurated the Merakes Field oil and gas development project in the East Sepinggan Working Area, East Kalimantan. The investment value of the project reaches US$ 1.3 billion or Rp 18.5 trillion. The project, which is operated by ENI East Sepinggan Ltd, has started onstream in April 2021 and will deliver gas of 368 million standard cubic feet per day (MMSCFD) at peak production.

ENI

"With the completion of one of the major oil and gas projects, namely the development of the Merakes field, it is hoped that the production and utilization of natural gas in Indonesia" will increase," said Arifin.

the Merakes Field by ENI

    Production from the Merakes Field will contribute to the extension of the operating life of the PT Badak Natural Gas Liquefaction (NGL) gas refinery in Bontang, East Kalimantan. Near the Merakes Field location, the Floating Production Unit/FPU is also distributed through gas pipelines for domestic needs of 117 MMSCFD from 2022 - 2025.

"The government continues to encourage efforts to increase reserves, oil and gas production, and optimize the use of natural gas for domestic needs, which currently stands at 63.9%," said Arifin.

    The share of natural gas in the current national energy mix should be 19%. Based on Government Regulation No. 79 of 2014 concerning National Energy Policy, this portion is targeted to be 22% by 2025.

"To achieve this target, there are obstacles such as the decline in oil and gas production caused by old oil and gas fields, no new large reserves being found, and the lack of exploration. Therefore, we will continue to boost the fulfillment of domestic gas," said the Minister of Energy and Mineral Resources.

Blogger Agus Purnomo in SKK Migas

    On the same occasion, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said that this project was previously targeted to be onstream in the third quarter of 2020. However, due to the COVID-19 pandemic, it was postponed to April 27, 2021. 

    He said the Merakes natural gas project will help meet the supply of piped gas needs in East Kalimantan as well as the need for liquefied natural ga domestic and export. The Merakes Field was developed with an investment of US$ 1.6 billion.

Media Indonesia, Page-10, Wednesday, June 9, 2021

The Jambaran-Tiung Biru Project Must Be Completed This Year

 

    The government is encouraging the development of the Jambaran-Tiung Biru (JTB) Project to operate by the end of this year. This is because the project with an estimated production of 192 million standard cubic feet per day / MMscfd is already awaiting its gas supply. 

ESDM

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif said that the Covid-19 pandemic caused obstacles in the completion of the JTB Project. However, given the importance of this project, his party hopes that this project can still be completed this year.

the JTB Project

"We have asked the management to catch up again so that this project can produce gas at the end of the year. We really hope that gas from JTB can be produced immediately, "he said.

    As scheduled, the projects that are included in the list of National Strategic Projects (PSN) are supposed to start operating in the third quarter of this year. However, the pandemic hindered the completion of the project.

PT Pertamina EP Cepu (PEPC)

    President Director of PT Pertamina EP Cepu (PEPC) Awang Lazuardi explained, even though the pandemic is still ongoing, his party continues to catch up with certain sectors by achieving more progress in other sectors. This is so that the overall project is still on target. Until now, the work on the JTB Project has reached more than 89%.

"Overall we still have a significant difference in progress, although there are some parts that have not arrived. However, we are optimistic that the on stream target will be achieved according to schedule, "he said.

    Currently, several production facilities at the JTB Project are increasingly complete. Some of them include the installation of high-tech processing pipes and tubes, to other supporting facilities such as dormitory buildings. There were obstacles to the process of fabricating tools and sending them from abroad.

    To overcome this, Pertamina EP Cepu (PEPC) increases the number of workers to complete jobs whose components are already available in the country. Previously, Deputy for Finance and Monetization of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Arief S Handoko said the JTB Project is one of three projects that will provide additional gas supply, mainly in East Java. This project is even the project that will generate the largest additional supply, reaching 192 MMscfd.

Blogger Agus Purnomo in SKK Migas

"The largest additional supply will be obtained from the JTB Project which we estimate will be on stream in the fourth quarter of 2021. This project can supply gas amounting to 192 MMscfd, which will be supplied not only to East Java but also to Central Java, "said Arief.

    The JTB project includes the construction of a gas processing facility / GPF and its supporting facilities, as well as the drilling of six development wells and one plug and abandonment well. With the optimization of the GPF design, the salable gas production from this project can be increased from 172 MMscfd to 192 MMscfd.

    This gas production will be channeled through the Gresik-Semarang transmission pipe owned by PT Pertamina Gas (Pertagas). Pertamina has signed the Jambaran-Tiung Biru gas sale and purchases agreement (PJBG) with PT PLN (Persero). Gas from the Jambaran-Tiung Biru project will be supplied to PLN by 100 MMscfd and the remaining 72 MMscfd for industries in Central and East Java.

    To date, the costs incurred to build the GPF are recorded at the US $ 974.44 million or 73.4% of the total approved budget (authorization for expenditure / AFE) of US $ 1.32 billion. Meanwhile, the number of workers involved in working on this project was 7,842 people.

Investor Daily, Page-10, Saturday, April 24, 2021

Tangguh LNG Operators are 85% from Papua

 

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif reiterated the Government's commitment that in 2029, as many as 85% of the operator workforce at Tangguh LNG will come from Papua. This was conveyed by the Minister of Energy and Mineral Resources while attending the Graduation Ceremony of the BP Berau Papuan Technician Apprentice Program, which was held virtually.

BP

    Arifin also expressed his appreciation to the Cooperation Contract Contractor (KKKS) BP Berau for the dedication given to carrying out the apprenticeship program, especially for these children from West Papua.

"It is hoped that the graduates will succeed in becoming part of the Tangguh LNG operation so that it will have an impact on the welfare of the family and also the communities around Tangguh LNG operations in particular and the people of West Papua in general," said Arifin.

Blogger Agus Purnomo in SKK Migas

    Also attending the event were Director General of Oil and Gas Tutuka Ariadji, Deputy Head of SKK Migas Fatar Yani, Deputy Governor of West Papua Mohamad Lakotani, Regent of Teluk Bintuni Petrus Kasihiw, and BP Regional President of Asia Pacific Nader Zaki. 

    With the increasing number of domestic children taking part in the oil and gas industry, the Minister hopes that it can have a real impact on improving the performance of the local oil and gas industry.

    Since this apprenticeship program began in 2016, to date, 71 participants have completed the apprenticeship program, of which 68 have worked at Tangguh LNG. The graduates in this third period have gone through a three-year training period. The knowledge and skills learned are not only beneficial in operating the Tangguh LNG plant, but also for various refineries in Indonesia and abroad.

"Through a three-year apprenticeship program, I hope that the participants will be able to meet the high standards required of a professional in the oil and gas industry," he added.

    The Minister of Energy and Mineral Resources also asked the graduates not to become complacent. On the other hand, they must continue to improve their respective abilities so that one day they will not only become operators but also become one of the leadership ranks or even become experts in various domestic and foreign oil and gas companies.

Investor Daily, Page-9, Thursday,  March 18, 2021

Additional Key Incentives to Reach the Target of 1 Million BPD

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that the success of achieving the target of 1 million barrels per day (BPD) in 2030 depends on additional incentives from the government. 

Blogger Agus Purnomo in SKK Migas

    Without additional incentives, oil production will only be around 500 thousand BPD in 2030.

Dwi Soetjipto

    Head of SKK Migas Dwi Soetjipto said, referring to Wood Mackenzie, Indonesia's oil and gas prospectivity rating is still very good, although a bit low. However, based on IHS Markit's research, the country's risk rating and the national fiscal system are considered to continue to decline from year to year. With the potential for oil and gas, this fiscal improvement is the key for Indonesia to work on its oil and gas prospects. Moreover, oil production has continued to decline over the last 20 years.

"So far, it is known that we have 128 basins and only 20 basins are producing. "This should be our concern whether we will just accept the decline," he said in a meeting with Commission VII on the energy sector of the House of Representatives.

    He explained, according to the projections prepared by his party, oil production could be increased to 1 million BPD in 2030 if there were flexible and competitive incentives provided. On the other hand, without incentives, the projection results show that national oil production will only reach the range of 500 thousand BPD in 2030. The same thing he said applies to gas production, although the conditions are better. Without incentives, national gas production is relatively stable in the range of 6 billion standard cubic feet per day / BSCFD until 2030. However, if you want this gas production to increase, incentives are still needed.

"Providing flexible, competitive, and case-by-case incentives does not eliminate the obligation to seek massive potential, implement aggressive and efficient work programs, and run other enablers such as completing permits, land, and others," Dwi said.

    He added that the government is committed to improving the national oil and gas investment climate, including the provision of incentives for oil and gas companies. In fact, the meeting related to this matter was directly chaired by the Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif.

"There are currently intense discussions led by the Minister of Energy and Mineral Resources about this incentive and how to make Indonesia's upstream oil and gas investment increase or have a strong appeal higher than other countries, "he said.

    So far, several improvements have been made to encourage oil and gas exploration. In detail, the availability of subsurface data, data openness, promotion of potential areas through roadshow investors and virtual data rooms which are still in preparation, as well as exploration funding from a firm work commitment (COW) of US $ 1.7 billion and the transfer of the remaining KKP for open area exploration.

    Meanwhile, to maintain the economy of the oil and gas project, Dwi revealed, there are several incentives that have been implemented. First, the elimination of Liquefied natural gas / LNG State Revenue Tax according to Government Regulation number 48 of 2020. Furthermore, the elimination of the cost of utilizing state property in accordance with the Minister of Finance Regulation number 140 of 2020.

"Then fiscal flexibility through investment incentives such as full price DMO, accelerated depreciation and split changes, so far have been given to the Mahakam Block, South Natuna Sea B, and Sanga-Sanga," he explained.

    Meanwhile, the incentives that are still under discussion are postponement or reduction of indirect taxes of up to 100%, elimination of costs for utilization of the Badak LNG Plant, tax holidays for income tax (PPh), assume and discharge, and tax allowances, as well as support for upstream oil and gas supporting industries.

Strong Planning

    Member of Commission VII in the energy sector of the Indonesian House of Representatives, Maman Abdurrahman, stated that Commission VII fully supports SKK Migas, which has set a production target of 1 million BPD in 2030. However, his party reminded SKK Migas to seriously work on this target. Moreover, in the last four years, the national oil production has not increased.

"Our national oil production greatly affects our macro assumptions. I am only one, I see a downward trend in production, that the planning team must really pay attention to. We don't want to be just lip service. So, the planning team must be strengthened, "he said.

    According to the Deputy Chairperson of Commission VII in the energy sector of the Indonesian House of Representatives Ramson Siagian, in the last three years, the realization of national oil production has always missed planned by SKK Migas. In view of this, he assesses that the target of 1 million BPD seems unrealistic. For that, planning at SKK Migas must be strengthened.

"This is like wishful thinking, unrealistic. I see a reliable Enhanced Oil Recovery, not new exploration, ”said Ramson.

    Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM), Tutuka Ariadji, previously said that a production target of 1 million BPD of oil and 12 BSCFD of gas is needed to ensure energy supply in the future. This target setting refers to national energy needs. Although at the same time the government is also encouraging the development of the electric vehicle ecosystem, this does not mean that the two targets are in conflict. Moreover, the transition to electric vehicles cannot occur significantly in a short period of time.

"Currently, our oil needs are around 1.6 million BPD, production 700 thousand BPD. We even produce up to 1 million BPD, still not a lot. Even electric cars cannot suddenly develop a large amount, "he said.

Investor Daily, Page-10, Monday, Feb 8, 2021

Government Prepares 50 Oil and Gas Blocks for Auction

To increase national oil production, the government has prepared 50 oil and gas blocks to be auctioned in the period 2021-2024. This is because the national demand for crude oil will increase to 1.49 million barrels per day (BPD) in 2030.

Secretary-General of the National Energy Council (DEN) Djoko Siswanto said that an auction of oil and gas blocks is necessary to increase national oil production. This is because once all fuel oil (BBM) refinery projects are completed, the refinery's raw material requirement for crude oil will increase to 1.4 million BPD.

"So to increase oil production, the government will auction off new working areas in 2021 to 2024," he said.

In 2021, there will be 10 oil and gas blocks which are a diversion from the planned auction in 2020, and 10 oil and gas blocks resulting from a joint study that was completed last year as well. Furthermore, 10 oil and gas blocks each will be offered in 2022-2024.

"In 2024, there are also 10 working areas that can be auctioned off to increase oil production as raw material for refineries," he said.

Referring to DEN's Grand National Energy Strategy (GSEN), a total of 50 oil and gas blocks are prepared for auction. In 2021, the oil and gas blocks prepared are the West Palmerah, Rangkas, Liman, Bose, Maratua II, Merangin III, Sekayu, North Kangean, Mamberamo, and Cendrawasih VIII blocks.

In addition, there are also blocks from the joint study, namely the Arakundo Block, Offshore Northwest Aceh, Offshore Southwest Aceh, South CPP, Bertak Pijar Puyuh, Sumbagsel, Serunai, Deep Water Bali, Bali Strait, and Karaeng. In 2022, the blocks to be prepared are the Barakuda Block, Peri Mahakam, North Ketapang, East Gebang, Ranau, East Muriah, Buton, Off Pulau Moa Selatan, Ogar, and West Papua III.

Next, the blocks that will be auctioned off in 2023 are the South Barito, North West Ganal, Budong-Budong, Malunda, East Bula, Semai IV, Kei, Papeda, Warim, and Asmar blocks. The last 10 blocks planned to be offered in 2024 are East Gebang, Baronang, Sokang, Kuningan, South Matindok, Enrekang, Bukat, Bulungan, Bone, and East Sokang.

However, for 2021, the Ministry of Energy and Mineral Resources (ESDM) has only confirmed the auction of 10 oil and gas blocks, which is a diversion from the planned auction in 2020.

ESDM Ministry's Upstream Oil and Gas Business Development Director Mustafid Gunawan said five oil and gas blocks would be offered through regular auctions, namely Merangi III, Sekayu, North Kangean, Cendrawasih Offshore, and Mamberamo Blocks. Furthermore, five other blocks were auctioned through direct bidding, namely West Palmerah, Liman, Rangkas, Bose, and Maratua II.

"This work area is expected to be offered in the first quarter to the first semester of 2021. This offer is the first implementation of the contract scheme flexibility Permen, "he said.

With the flexibility of the contract scheme, he hopes that the auction will remain in demand even though the Covid-19 pandemic is still ongoing.

Still Import

Djoko explained that the government has targeted oil production to be increased to 1 million BPD in 2030 after the refinery needs raw materials. This is because, without any effort, crude oil imports will be huge in the future. In fact, with a target of 1 as well as BPD alone, crude oil imports still have to be done.

"If the oil production target of 1 million BPD is successful, we still need to import 324 thousand BPD later in 2026-2027, the peak of operational refineries, both existing and built refineries," explained Djoko.

Based on GSEN DEN data, domestic crude oil demand will increase from 909 thousand BPD in 2020 to 993 thousand in 2025, and reach 1.49 million BPD in 2030. While domestic oil production is projected to increase from a range of 742 thousand in 2020 to 2025 to 1 million BPD in 2030. However, oil imports of 338 thousand BPD are estimated to be needed in 2030 and 441 thousand BPD in 2040.

In fact, the increase in domestic oil production has already taken into account additional projects from enhanced oil recovery / EOR and exploration. Oil production from EOR activities are targeted at 18 thousand BPD in 2025, up to 106 thousand BPD in 2030, and reaching 261 thousand BPD in 2040. 

    Meanwhile, additional production from exploration is 109 thousand BPD in 2030 and 220 thousand BPD in 2040. Additional production is also derived from the acquisition of 122 thousand BPD in 2025, 150 thousand in 2030, and 170 thousand in 2040.

Investor Daily, Page-10, Tuesday, Jan 26, 2021