The Government will Facilitate the Acquisition of Oil and Gas Blocks Abroad

    The Ministry of Energy and Mineral Resources (ESDM) stated that it would facilitate the acquisition of oil and gas blocks overseas by oil and gas companies in Indonesia. The acquisition of oil and gas blocks in other countries is one of the government's strategies to pursue the oil production target of 1 million barrels per day (BPD) by 2030.

    Director of Oil and Gas Program Development at the Ministry of Energy and Mineral Resources Dwi Anggoro Ismu Kurnianto said the oil production target of 1 million BPD in 2030 has been included in the Grand National Energy Strategy (GSEN) where the National Energy Council (DEN) is finalized.  

    One solution to achieve this target is the acquisition of oil and gas fields abroad. This acquisition was carried out through PT Pertamina (Persero) as a State-Owned Enterprise (BUMN) engaged in the oil and gas sector of national oil and gas companies, such as PT Medco Energi Internasional.

"The government will facilitate through bilateral cooperation, starting with G to G (government to government)," he said.

    The acquisition plan was also conveyed at the 1st Meeting of the Joint Committee on Energy between the Ministry of Energy and Mineral Resources and the Moroccan Ministry of Energy, Mines, and Environment.

    

Blogger Agus Purnomo in SKK Migas

    In this event, representatives of Pertamina and the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) were also present so that they could obtain opportunities for cooperation in the oil and gas sector. However, Dwi Anggoro added, that the government's support for the acquisition of this oil and gas block is not limited to Morocco.

"Not only in Morocco but also in other countries," he said.

    Both Pertamina and Medco Energi have also been expanding their upstream oil and gas business overseas. Pertamina has several oil and gas blocks in 12 countries. In Algeria, the company owns shares in the Menzel Lejmat North (MLN), El Merk (EMK), and Ourhoud (OHD) blocks. apart from Algeria. 

    In Iraq, Pertamina holds shares in West Qurna 1 Field. While in Malaysia, Pertamina holds shareholdings in Block K, Block Kikeh, Block SNP, Block SK-309, and Block SK-311.

    Furthermore, after the acquisition of the French oil and gas company, Maurel & Prom, the company has oil and gas assets spread across Gabon, Nigeria, Tanzania, Namibia, Colombia, Canada, Myanmar, Italy, and other countries. However, its main assets that are already producing are in Gabon, Nigeria, and Tanzania. These overseas oil and gas blocks have contributed to Pertamina's overall production which reached 861 thousand barrels of oil equivalent per day/BOEPD in the first quarter of 2021.

    President Director of PT Pertamina Hulu Energi (PHE) Budiman Parhusip had said, the contribution of the realization of this oil and gas production was 147 thousand BOEPD from international oil and gas fields and 713 thousand BOEPD from domestic. In detail, oil production from foreign assets was recorded at 97 thousand bpd and gas 291 MMScfd.

    Meanwhile, on its official website, Medco owns shares in 10 oil and gas blocks overseas. In detail, Blocks 10 and 12 in Mexico, Area 47 in Libya, Block 9 in Yemen, Karim Field in Oman, Blocks 1 and 4 in Tanzania, Bualuang, and Sinphuhorm Fields in Thailand, and Block 12W (Chim Sao and Dua) ​​in Vietnam.

    Some of Medco's oil and gas blocks are already in production. In the first quarter of 2021, Medco's total oil and gas production, both from within and outside the country, was recorded at 101 thousand BOEPD. Dwi Anggoro continued, based on the status at the end of 2020, Indonesia's oil reserves were recorded at 4.2 billion barrels and 62.4 trillion cubic feet of gas. 

    If there are no new discoveries, the age of this oil reserve is only about 9 years and gas about 18 years. To meet domestic demand which reaches 1.5 million bpd, Indonesia is forced to import oil because domestic production is only around 745 thousand bpd.

    However, he said the government would not only rely on additional production from abroad. Although oil production continues to decline, the government will continue to focus on achieving the production target of 1 million bpd with various efforts, including enhanced oil recovery (EOR), increasing exploration activities, utilizing new technology, as well as simplification and flexibility of the procurement process.

Infrastructure development

    In addition to increasing oil and gas production, the government also continues to build oil and gas infrastructure to strengthen national energy security. The government will increase the capacity of fuel oil refineries and build natural gas infrastructure.

“The government encourages the development of national oil and gas infrastructure, both LNG, gas, and refineries. Therefore, we are very open to collaborating with any partner countries in investing in the oil and gas sub-sector,” he said when giving a presentation at the 1st Meeting of the Joint Committee on Energy between the Ministry of Energy and Mineral Resources and the Moroccan Ministry of Energy, Mining and Environment.

    Regarding the development of natural gas infrastructure, Indonesia has prepared a national natural gas master plan, including building PLTMG, gas pipeline infrastructure, and natural gas networks for households. Especially for the gas network, by 2020 696,011 house gas connections (SR) have been built.

"The government targets that by 2024, the number of gas networks built will reach 4 million SR," added Dwi Anggoro.

Investor Daily, Page-10, Tuesday, June 29, 2021.

The Government Needs to Provide Fiscal Flexibility to Boost Oil and Gas Production

Indonesia is considered to still have the potential for oil and gas to realize the national oil production target of 1 million barrels per day (BPD) and 12 billion cubic feet of gas per day by 2030. However, to achieve that, the government needs to change the fiscal aspects of current oil and gas contracts to be more flexible. according to the conditions of the oil and gas block.

Bij Agarwal

Acting President of the Indonesia Petroleum Association (IPA), Bij Agarwal, said that currently the global oil and gas industry has been hit by the oil price war and the Covid-19 pandemic. This condition forces global oil and gas companies to cut their investment budgets, one of which is to prioritize projects with a high Internal Rate of Return/IRR. 

    As a result, oil and gas investment funds that enter Southeast Asia, including Indonesia, are getting smaller. So that Indonesia must be competing to attract these funds. On the other hand, he added, Indonesia is less attractive than other countries.

Referring to Wood Mc. Kenzie who saw how attractive the fiscal prerequisites for oil and gas in certain countries were related to the potential for oil and gas, fiscal and policy stability, and project costs, Indonesia got 2.35 points. This is despite the fact that the average level of global fiscal attractiveness is at the level of 3.3. In fact, Indonesia still has oil and gas potential that can be developed to realize the oil production target of 1 million BPD in 2030.

"For that, we have to find a way so that this limited investment fund can be allocated in Indonesia by oil and gas companies. One of them is by increasing the economic level of oil and gas projects in Indonesia, "said Bij in an online discussion entitled The Role of Internal Audit to Safeguard 1 Million Barrel Oil Production Target.

IPA, he explained, noted three things that must be improved to achieve the target of 1 million BPD. First, the government establishes a globally competitive fiscal aspect, which includes flexibility in the types of oil and gas contracts, better split, gas prices, the principle of Assume and Discharge, taxation, and Tax Holiday.

Second, the government must be able to provide sanctity of contracts, including preventing criminalization attempts. Finally, the ease of doing business, including more efficient licensing and approval.

"The target of 1 million BPD is impressive, but this can be achieved if these three things are met. The resources are there, we have to make it economically attractive, ”said Bij.

Hilmi Panigoro

The President Director of Medco Energi Hilmi Panigoro also shared the same opinion. According to him, the oil production target of 1 million BPD is not impossible to achieve as long as the fiscal aspects offered are very attractive.

According to him, Oman has succeeded in increasing its oil production from below 700 thousand BPD to more than 1 million BPD in this way. He said that Oman's additional oil production was mostly obtained from enhanced oil recovery (EOR) activities. 

    To encourage oil and gas companies to strive to increase the production of block oil under its management, Oman provides special contracts according to the conditions of each oil and gas block. Medco, which manages one of the blocks in the country, is given a service contract.

"We are not given any risk, all costs are reimbursed, we are only asked to increase production and get a reward of 5% of the resulting production. So there is an incentive for investors to be enthusiastic about doing various technically and financially ways to increase production, "Hilmi explained.

According to Hilmi, this strategy can be emulated in Indonesia. Moreover, one of the strategies to achieve 1 million BPD oil production is to implement EOR. The government he said that he could form a team that identified several fields that could be candidates for EOR and drafted special contracts tailored to the conditions of each field.

"The fiscal term for each field must be different. That's the key to success. So far, EOR is the willingness to create a flexible fiscal term in accordance with the field. Today there are 1-2 field candidates, but they cannot be EOR due to fiscal term constraints, "he explained.

Dwi Soetjipto

Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said there are four strategies to pursue the production of 1 million BPD in 2030. The details are maintaining existing production, accelerating the transformation of resources to reserves, EOR, and exploration. 

Blogger Agus Purnomo in SKK Migas

    To maintain existing production, his company has realized an additional 18,300 BPD of oil production and 17 million standard cubic feet per day / MMscfd of gas this year. SKK Migas has also succeeded in encouraging initial investment in the Rokan Block to drill wells during the management transition period.

Sakakemang Block

Furthermore, to accelerate the addition of reserves, his party has accelerated the operation of PB Field, Mahato Block, and KBD Field, Sakakemang Block. In addition, his party also has a Massive Development Plan (MDP) program and delineation well drilling to accelerate the development of undeveloped findings.

"There are 3 MDPs with potential reserves of 88 MMBOE (million barrel oil equivalent) that have been approved, 3 MDPs of 450 MMBOE were submitted to the Minister of Energy and Mineral Resources, and 3 MDPs of more than 200 MMBOE in the evaluation," Dwi said.

For EOR activities, his party is currently evaluating the EOR chemical substance EOR pre-plan in Minas Field, Rokan Block with an operation target in 2024. PT Pertamina EP has also conducted EOR polymer field trials in Tanjung Field. Regarding exploration activities, PT Pertamina Hulu Energi has conducted 2D seismic data acquisition in an open area of ​​32,200 km.

"This data will be open in the next year," he said.

Next, there are also plans to drill large wells, namely 6 giant wells and 2 discovered wells. The success ratio of exploration drilling in Indonesia in 2020 is recorded at 55%. Furthermore, to accelerate the addition of reserves, his party has accelerated the operation of PB Field, Mahato Block, and KBD Field, Sakakemang Block. In addition, his party also has a Massive Development Plan (MDP) program and delineation well drilling to accelerate the development of undeveloped findings.

"There are 3 MDPs with potential reserves of 88 MMBOE (million barrel oil equivalent) that have been approved, 3 MDPs of 450 MMBOE were submitted to the Minister of Energy and Mineral Resources, and 3 MDPs of more than 200 MMBOE in the evaluation," Dwi said.

PT Pertamina EP

For EOR activities, his party is currently evaluating the EOR chemical substance EOR pre-plan in Minas Field, Rokan Block with an operation target in 2024. PT Pertamina EP has also conducted EOR polymer field trials in Tanjung Field. Regarding exploration activities, PT Pertamina Hulu Energi has conducted 2D seismic data acquisition in an open area of ​​32,200 km.

PT Pertamina Hulu Energi

"This data will be open in the next year," he said.

Next, there are also plans to drill large wells, namely 6 giant wells and 2 discovered wells. The success ratio of exploration drilling in Indonesia in 2020 is recorded at 55%.

Investor Daily, Page-10, Tuesday, Nov 3, 2020

Medco West Eel Exploration Well Drill-1

 

Medco E&P Natuna Ltd (Medco) began drilling the West Belut-1 exploration well in Block B South Natuna Sea, Riau Islands. The West Belut-1 well is the fourth exploration well drilled by Medco in Block B South Natuna Sea this year.

Deputy Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Fatar Yani Abdurrahman appreciated Medco's aggressive move to drill exploration wells amid the Covid-19 pandemic. 

Blogger Agus Purnomo in SKK Migas

    Prior to West Belut-1, Medco had also drilled exploration wells for Bronang-2, Kaci-2, and Terubuk-5 in Block B South Natuna Sea.

"This is an endeavor in the midst of the situation we face. We hope that this drilling will also succeed in adding to the national oil and gas resources following the success of previous wells, "he said.

From previous drilling activities, the Kaci-2 Well succeeded in delivering high-quality dry gas with test results of 13 million cubic feet per day (million standard cubic feet per day / MMscfd) from 2 DST zones. Meanwhile, the flow test results from the Bronang-2 exploration well were recorded at 45 MMscfd from 4 DST zones.

    Furthermore, Medco also succeeded in finding additional oil and gas resources through the Terubuk-5 well drilling. From the three results of the well testing interval, this well is proven to flow 33 MMscfd of gas and 3,300 barrels of oil and condensate per day (bpd) from 3 DST zones.

Fatar Yani hopes that drilling activities and the like will always get support from various related parties. Thus, efforts to increase national oil and gas resources can be carried out smoothly.

"Hopefully in the future, we will get significant additions, so that the goal of 1 million barrels of oil per day in 2030 can be realized," he added.

Investor Daily, Page-10, Monday, Oct 5, 2020.

7 Oil Producers Exceed Production Targets

Seven Indonesian oil producers (Cooperation Contract Contractors / KKKS) exceeded the 2020 oil production target set in the State Budget (APBN).

The seven oil producers are ExxonMobil Cepu Ltd (EMCL), Chevron Pacific Indonesia, Pertamina Upstream Energy ONWJ, Medco E&P Natuna, Pertamina Upstream Sanga-Sanga, Medco E&P Rimau, and JOB Pertamina-Medco Tomori Sulawesi LTD. Exceeding the highest target was achieved by Medco E&P Natuna which reached 119.6% of the APBN target.

"We continue to supervise and increase the intensity of coordination with KKS Contractors to discuss steps to improve upstream oil and gas operational performance and program implementation in line with Work, Programs and Budget (WP&B) in 2020," said Head of the Special Task Force for Upstream Oil and Gas Business Activities, Dwi Soetjipto, in Jakarta.

Dwi Soetjipto

Based on SKK Migas notes, until early March 2020, there are a number of KKKS that have not reached their production targets due to several reasons.

"There are KKKS that have carried out activities, but the results obtained are not as high as predicted or have not reached the target, for that we will evaluate the KKKS program and ensure that production is on target," Dwi said.

To monitor the investment and production activities of the KKKS, SKK Migas is calling at the same time finding a solution with the KKKS that cannot realize the production according to the target. 

    Regarding KKKS that have not yet reached the target, Dwi said, his party continues to conduct evaluations to ensure that the activities they carry out can support the achievement of production targets in the coming years, primarily in achieving the target of 1 million barrels.

In addition to the 7 oil producers, there are four KKKS gas producers that exceed the channeling targets, namely Pertamina Hulu Mahakam, ENI Muara Bakau BV, Premier Oil Indonesia and Petrochina International Jabung LTD. The highest production exceeding was achieved by Premier Oil Indonesia, which reached 121.2% of the APBN calculation target

Investor Daily, Page-9, Wednesday, March 11, 2020

Waiting for the Blessing of Crude Oil

    The performance of oil and gas issuers will get hotter after world crude oil prices continue to break new records, driven by OPEC's decision to cut production by 1.2 million barrels per day. The performance of oil and gas issuers until the third quarter of 2016 was still under pressure.

    Positive performance can only be achieved by PT Medco Energi Internasional Tbk. (MEDC), of the seven oil and gas issuers listed on the Indonesia Stock Exchange. A mining stock analyst from PT Recaptal Securities Kiswoyo Adi Joe assesses the blessing of crude oil prices can be achieved by issuers as early 2017. The skyrocketing crude oil price still needs further scrutiny to project the performance of issuers in Indonesia.

    The Brent oil contract traded at US$54.46 per barrel at the close in London, up 1% from its previous close. Throughout last week, Brent posted its most drastic gain since January 2009 with a 13% increase.

    Drastic strengthening also occurred in New York. The WTI contract traded 1.2% higher to its highest since July 2015 at US$51.68 per barrel. On the other hand, the price of Indonesian crude oil in November fell by US$ 3.39 per barrel from US$ 47.55 in October to US$ 43.25.

    Kiswoyo assessed that the trend of strengthening world crude oil prices would depend on demand. Winter in Europe and other countries are projected to increase demand. If the increase in oil prices persists, it will have a positive impact on the performance of issuers because the sale of oil is not carried out on a contract basis like coal.

    The upward trend will be confirmed when winter is over, but demand is still high. He assesses that oil and gas issuers will succeed if prices stay above US$ 80 per barrel for more than three months. The average cost of producing oil by issuers in Indonesia reaches US$20-US$35 per barrel.

    Senior Market & Technical Analyst at PT Daewoo Securities Indonesia Heldy Arifien assessed that oil and gas companies will still be the choice of market players until the end of this year. The oil and gas sector is projected to remain the prima donna of investors, especially in window dressing.

“We have a projected oil resistance of US$ 58 per barrel to US$60 per barrel. Until the end of the year, the average was US$ 48 per barrel. The oil price euphoria was used by investors for window dressing at least until the first quarter of 2017. Mining sector shares as of Thursday (Dec 1) shot up 73.76% throughout the year, far behind other sectors and the Jakarta Composite Index (JCI) which rose 13,19% (year-to-date).

Bisnis Indonesia, Page-1, Tuesday, Dec 6,2016