Pertamina Assesses Transfer of New Refinery Project Location

PT Pertamina (Persero) chose Kuala Tanjung in North Sumatra or Arun in Aceh as the location for the construction of a new Grass Root Refinery / GRR refinery replacing the Bontang refinery in East Kalimantan.

Pertamina's Investment Planning and Risk Management Director Heru Setiawan explained that one of the plans to relocate the project was due to consideration of the replacement of the new refinery development partner.

Overseas Oil and Gas (OOG) Llc

At present the partners who have signed a partnership in the Bontang GRR development project are an oil and gas company from Oman, Overseas Oil and Gas (OOG) Llc.

It is planned that Pertamina will move the GRR development project from Bontang in East Kalimantan to Kuala Tanjung or Arun in Aceh by cooperating with prospective new partners. 

     According to him, the two regions were chosen because they have aspects of land availability. In addition to the location of Kuala Tanjung and Arun, the company is considered closer to the international market.

Nicke Widyawati

Meanwhile, Pertamina's GRR project has so far not yet reached the construction stage. Previously, Pertamina President Director Nicke Widyawati acknowledged the option to replace partners in the construction of the Bontang refinery.

Nicke Widyawati

Nicke Widyawati said that his party was still looking for other partnership options considering that there were several things that prevented the previous option. Nicke said initial work was still being carried out while Pertamina re-elected partners.

Luhut Binsar Pandjaitan

Meanwhile Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan gave a signal that the development of the Bontang refinery project will involve investors from the United Arab Emirates.

"Partners in the East Kalimantan Bontang Refinery are very changeable. So later investors from Abu Dhabi can enter. "

Bisnis Indonesia, Page-23, Tuesday, March 3, 2020

Pertamina EP Drilled Nine Wells

PT Pertamina EP succeeded in completing the drilling of nine development wells and has even contributed to oil production in January 2020. Pertamina EP President Director Nanang Abdul Manaf said the nine wells came from four Pertamina EP assets.

PT Pertamina EP

"Each of the wells from asset-1, asset-2, and asset-3 as well as six wells from asset 5. Some of the wells drilled at the end of December 2019 were already producing in January, he explained.

The asset-1 well, the Bentayan-Ramba Well, contributes to oil production of 20 barrels per day (BPD). Then well-pavilion-Pendopo from asset-2 with a production of 50 BPD, and one oil and gas well from asset-3, namely Cemara Timur Cemara-Jatibarang with oil production 728 BPD and gas 5 million standard cubic feet per day (mmscfd). 

    Pertamina EP also completed drilling of six wells on asset 5. The six wells are Sangatta Well with 530 BPD production, Bunyu Well (B-203) with 457 BPD production and Bunyu Well (B-204) of 207 BPD.

"Two dives of the Tanjung Una-Sangasanga Well with a production of 308 BPD and the Louise Well of 577 BPD," said Nanang.

As of January 2020, Pertamina EP oil production reached 80,925 BPD and 965 mmscfd gas. KONTAN Note, Pertamina EP projects oil production of 85,000 bopd and 932 million mmscfd of gas this year.

Kontan, Page-14, Monday, March 2, 2020

Pertamina EP Cepu Wins International Award

PT Pertamina EP Cepu (PEPC), a subsidiary of PT Pertamina (Persero) received a prestigious international award from Project Financing International (PFI).

PT Pertamina EP Cepu (PEPC)

The award was given at the 2019 PFI Award some time ago in London, England. At the event, the award held by PFI named PEPC as the Asia Pacific Oil and Gas Deal of the Year.

Nicke Widyawati

The awarding ceremony was attended by Pertamina's President Director Nicke Widyawati and PEPC Managing Director, Jamsaton Nababan, "said PEPC Public Administration (PGA) Government Manager Edi Purnomo, Friday (2/28/2020).

According to him the award was obtained because of the success of PEPC in obtaining project financing for the Jambaran-Tiung Biru Unitization (JTB) Gas Development Project as a whole.

Project financing can be completed in less than six months from the issuance of Project Info Memo (PIM) and Request for Proposals (RFP) on 30 January 2019 with Financial Close on 13 June 2019. 

     Project Financing The JTB project undertaken by PEPC is also one of the projects the first to combine conventional funding with Islamic funding, with a total funding value of USD 1.8 billion, consisting of conventional USD 1.7 billion and USD 100 million sharia (Wakala).

The financial institutions which are incorporated in the JTB Project Financing consist of eight international banks and four domestic banks. International banks that participated were the Bank of China, CIMB, DBS, Intesa Sanpaolo, Maybank, MUFG, Milbank, and SMBC.

"While the domestic financial institutions involved are Bank Mandiri, Bank Negara Indonesia, BTPN and Bank Rakyat Indonesia. The JTB project has been designated by the Government of Indonesia as one of the National Strategic Projects with gas production that will be distributed through Pertagas's Gresik-Semarang Gas Pipeline for use in the country, "said the former lecturer at the Faculty of Communication at Dr. Soetomo University in Surabaya.

JTB will have a production capacity of 330 MMSCFD (raw gas) with gas sales of 192 MMSCFD. The scope of work of the JTB Gas Project includes Land Acquisition that has been completed, Early Civil Work (ECW) which has also been completed.

JGC Corporation

The scope of work currently underway is the drilling of six gas wells carried out by Pertamina Drilling Services Indonesia (PDSI) which is a subsidiary of Pertamina (Persero) and the construction of the Gas Processing Facilities (GPF) conducted by the Consortium of PT. Industrial Engineering, PT. JGC Indonesia and JGC Corporation.

"The JTB Gas Project is scheduled for completion in 2021," he added

Duta Masyarakat, Page-16, Saturday, Feb 29, 2020.

Pertamina Accelerates BPD 1 Million Oil Production Target by 2026

PT Pertamina (Persero) seeks to accelerate the increase in national oil production to 1 million Barrels Per Day (BPD) in 2026, from the initial plan of 2030.

This is to anticipate the increase in demand for crude oil after the completion of six refinery projects in 2026. 

Nicke Widyawati

    Pertamina's Director Nicke Widyawati said the Special Task Force for Upstream Oil and Gas Business Activities (SKK oil and gas) is targeting an increase in oil production to 1 million BPD. in 2030.

To achieve this target, his party will increase the number of drilling wells, conduct seismic activities to find new reserves, and applying enhanced oil recovery (EOR) technology. However, his party is now preparing an optimistic scenario of this plan, so that oil production of 1 million BPD can be realized in 2026.

"We are making an optimistic case with the EOR [1 million BPD production] in 2026. We hope," he said in a meeting with Commission VI Indonesian Parliament.

Nicke explained, the accelerated increase in oil production needs to be done because the company's oil needs will surge in 2026. This follows the targeted completion of six of the company's refinery projects that year which will boost refinery capacity from the current 1 million BPD to 2 million BPD.

"Why is it accelerated in 2026? Because the refineries we built are starting to produce, and that needs an additional supply of crude oil, " Nicke said.

Regarding EOR, according to her, Pertamina's Upstream Directorate is currently detailing technologies that can be used. It targets the EOR can be done quickly so that the results can be felt immediately. One of these EOR technologies will be used to increase oil production in the Rokan Block after the operatorship is switched to Pertamina.

"Mr. Dharmawan [Pertamina Upstream Director] and SKK oil and gas are refining the technology that we can use to accelerate additional production in upstream oil and gas," said Nicke.

Even now, Pertamina through Pertamina EP has also implemented EOR in Tanjung Field. The company has also signed a core understanding between Pertamina and Repsol for the management of the full scale, including the implementation of the Surfactant-polymer EOR.

In the Jirak and Rantau Fields, Pertamina is conducting a Surfactant chemical application study for EOR implementation in both fields. Furthermore, Pertamina is currently conducting studies in several fields, namely Jatibarang, Sukowati, and Ramba for EOR with CO2 flooding.

Pertamina also expanded the EOR activities to the oil and gas block managed by PT Pertamina Hulu Energi (PHE), namely in the Offshore North West Java Block, precisely in the Zulu Field and E-Main. In addition, in the Batang field which is operated by PHE Siak, an EOR Steam flooding pilot project will be conducted in the near future.

Acquisition of oil and gas blocks

In addition to EOR, Nicke said that the acquisition of oil and gas production blocks overseas is also the company's strategy to accelerate the achievement of 1 million BPD oil production in 2026.

"Because it is a faster and more effective way to increase production, the acquired blocks will produce," Nicke said.

Referring to Pertamina's data, the state-owned company will budget upstream oil and gas investment funds this year US $ 3.7 billion. The funds will be used to develop the upstream oil and gas business organically and inorganically. 

   For details, funds for developing the upstream oil and gas business organically or increasing oil and gas production from existing assets of US $ 3.57 billion. Meanwhile, for inorganic business development of US $ 150 million.

Pertamina Upstream Director Dharmawan H Samsu Sempat explained that the upstream oil and gas inorganic investment is the addition of oil and gas block assets. Unfortunately, he was reluctant to mention which oil and gas block the company was targeting.

Dharmawan only mentioned one of the regions that the company targeted to add assets, namely in Africa. Previously, Dharmawan H Samsu also briefly mentioned targeting oil and gas assets in the Middle East region.

The last time Pertamina took over oil and gas assets in another country was in 2017. At that time, the company acquired 64.46% shares of the French oil and gas company, Maurel and Promm. Through this acquisition, the company has oil and gas assets spread in Gabon, Nigeria, Tanzania, Namibia, Colombia, Canada, Myanmar, Italy, and other countries.

However, the main assets that have been producing are in Gabon, Nigeria, and Tanzania. In addition, in Algeria, the company has shares in the Menzel Lejmet North (MLN) Block, El Merk (EMK), and Ourhoud (OHD). Next, in Iraq, the company holds shares in West Qurna 1. Field. While in Malaysia, the company holds shares in Block K, Block Kikeh, SNR Block SK309, and Block SK311.

Investor Daily, Page-9, Thursday, Feb 27, 2020.

PHE Develops Southeast Jambi Block

PT Pertamina (Persero) continues to strive to develop oil and gas in Indonesia, one of which is by participating in the management of the Southeast Jambi Work Area.

Repsol Exploration South East Jambi

At this time Repsol Exploration South East Jambi BM is acting as the operator of the Southeast Jambi Region and in collaboration with the Repsol Exploration South East Jambi B.V, Pertamina is confident and ready to develop the Southeast Jambi Exploration Working Area.

Ifki Sukarya

VP Relations of PT Pertamina Hulu Energi (PHE) Ifki Sukarya explained, as stipulated in Government Regulation Number 35 of 2004 concerning Upstream Oil and Gas Business Activities, this Cooperation was carried out through the process of taking ownership of participating interests from South-east Jambi Work Area operators.

In this case, Pertamina assigned one of its subsidiaries, PT PHE Southeast Jambi, as one of the participating interest holders in the Jambi South-east Working Area.

Repsol

"In order to realize this program, Pertamina continues to hold intensive discussions with Repsol Exploration South East Jambi B.V. at once communicating with the Government. Including the investment that will be carried out in the development of this Work Area, "added Ifki.

the signing of Participating Interest

Officially the signing of the collaboration was carried out by both parties, Repsol Exploration South East Jambi B.V. and PHE Southeast Jambi in the Central Jakarta Region.

The signing was carried out by the Director of PHE Southeast Jambi, Abdul Mutalib, with the General Manager of Repsol Exploration South East Jambi B.V. Greg Holman. One of Pertamina's corporate achievements in the early 2020, namely in cooperation with Repsol and MOECO in developing the Southeast Jambi Exploration Working Area.

This collaboration is the beginning of the partnership activities that will be carried out by the Upstream Directorate of PT Pertamina (Persero). Going forward, Pertamina will continue to look for opportunities to work with other Cooperation Contract Contractors (KKKS) to achieve Pertamina's production target of 923 thousand BOEPD in 2020.

Investor Daily, Page-9, Thursday, Feb 27, 2020.

Pertamina Acquires Southeast Jambi Oil and Gas Block

PT Pertamina (Persero) assigned a subsidiary of PT Pertamina Hulu Energi Southeast Jambi as one of the holders of 27% participating interest / PI in the Southeast Jambi Work Area.

With Pertamina's participation in the management of the Work Areas operated by Repsol Exploration South East Jambi B.V, it is expected to be able to support the company in achieving a production target of 923,000 boepd this year. 

Repsol

    VP Relations of PT PHE Ifki Sukarya said the acquisition of 27% PI from Repsol as stipulated in Government Regulation No. 35/2004 concerning Upstream Oil and Gas Business Activities.

Ifki Sukarya

"Participating interest acquired by 27% of the Repsol portion was 67%," he said.

the Take over Participating interest

The takeover was marked by the signing of the collaboration by Southeast Jambi PHE Director Abdul Mutalib and Repsol Exploracion South East Jambi General Manager Greg Holman in Central Jakarta, Wednesday (26/2).

"This cooperation is the beginning of the partnership activities that will be carried out by Pertamina's Upstream Directorate. Going forward, Pertamina will continue to look for opportunities to work with other Cooperation Contract Contractors (KKKS) to achieve Pertamina's production target of 925,000 boepd by 2020, "Ifki explained.

The Southeast Jambi Block

The Southeast Jambi Block is one of seven oil and gas blocks auctioned under a direct bidding scheme in the first phase of 2018. Initially, Talisman West Bengara B.V teamed up with MOECO South Sumatra Co., Ltd to form a consortium to develop the block. 

    However, Repsol acquired Talisman so that the contract was signed by the Consortium of Repsol Exploration South East Jambi B.V and MOECO Southeast Jambi B.V Repsol on 17 July 2018.

Bisnis Indonesia, Page-23, Thursday, Feb 27, 2020

Cepu Block EIA Revision Will Be Completed Soon

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) is optimistic that the revision of the Cepu Block Environmental Impact Analysis (EIA/Amdal) will be completed soon. Environmental Impact Analysis revision is needed so that oil production from the Cepu Block can be increased to 235 thousand barrels per day (BPD).

Deputy Head of SKK Migas Fatar Yami Abdullah said the local government's response to the proposed revision of the Cepu Block Environmental Impact Analysis was very good. Now the proposed Amdal revision of Exxon Mobil Cepu Limited (EMCL) has been fully discussed at the local government level.

the Cepu Block Exxon Mobil Cepu Limited (EMCL)

The Head of SKK Migas Dwi Soetjipto explained that Exxon Mobil had conducted a trial and the results of the Cepu Block production facility were stated to be able to produce oil up to 235 thousand BPD in safe conditions. 

     However, the increase in production of the Cepu Block is still awaiting approval of the revised environmental impact analysis (EIA). Because the current EIA only lists a maximum production of 220 thousand BPD.

As long as the Environmental Impact Analysis revision approval has not yet been obtained, oil production from the Banyu Urip Field had to be reduced due to the operation of the Kedung Keris Field. 

    This is so that operations in the Cepu Block do not violate the existing EIA. Oil production from the two fields can only be optimized after the new AMDAL is approved. So it cannot ascertain when the Kedung Keris Field reaches peak production.

Azi N Alam

Vice President of Public and Government Affairs of Exxon Mobil Indonesia Azi N Alam stated that his office continues to seek approval for the revision of the Cepu Block Environmental Impact Analysis. He continued to coordinate with the Ministry of Energy and Mineral Resources, SKK Migas, Ministry of Environment and Forestry (KLHK), and the Bojonegoro Regency Government.

the Cepu Block Field

The problem of the revision of the Cepu Block EIA which was not immediately approved by the Bojonegoro Regency Government was raised in a meeting of the House of Representatives Commission VII with the Cooperation Contract Contractor (KKKS). Not only that the Minister of Energy and Mineral Resources Arifin Tasrif previously also highlighted the problem of the slow approval of this Amdal revision.

Arifin explained that the Cepu Block has an important role in increasing national oil lifting. Moreover, President Joko Widodo is tasked with increasing national oil and gas lifting. Therefore the EIA approval process is a way to increase national oil lifting considering the Cepu Block contributes 30% of the national lifting.

In 2020, the national oil and gas lifting was set at 1.95 million boepd, up slightly from last year's realization of 1.8 million boepd. Specifically, oil production rose to 755 thousand BPD and the realization of 746 thousand BPD and gas to 1.19 million boepd from the realization of 1.06 million boepd.

Investor Daily, Page-9, Monday, Feb 24, 2020

PHE Pay Oil Spill Compensation

PT Pertamina Hulu Energi Offshore North West Java (PHE ONWJ) paid initial compensation for 1,999 affected residents in Karawang, West Java. Compensation is given to residents affected by gas leaks and oil spills in the Karawang Sea that have fulfilled the requirements. 

    PHE ONWJ partnered with the State-Owned Bank Association (Himbara) in the payment of this compensation.

This payment was made after the Karawang Regency Working Group Working Team finalized the improvement of data and re-verification of residents belonging to group B, namely affected residents who were included in the Regent's Decree but their identity data needed improvement.

Ifki Sukarya

PHE Vice President Relations Ifki Sukarya said the initial compensation payment for group B was made after the Karawang Working Group completed the citizens' identity data and re-verified the recommendations of the Financial and Development Supervisory Agency (BPKP).

Every citizen is entitled to receive compensation in the amount of Rp 1,800,000 for a two-month calculation with the number of group B to be paid as many as 1,999 residents. Ifki explained, PHE tried to carry out the process of paying compensation for affected residents as soon as possible, but of course as well as possible so that later it could be accounted for.

"We hope that all parties understand that this process requires carefulness and prudence so it takes time," Ifki Sukarya said.

At present, PHE ONWJ together with the IPB Team and the affected district or city Working Group simultaneously calculate final compensation based on data obtained.

Kontan, Page-14, Friday, Feb 21, 2020

Accelerated Masela Block Production Target

The government is targeting the Masela Block to start production in 2026 or a year earlier than the original schedule, which is in 2027. The total investment for the Masela Block reaches the US $ 19.8 billion. 

the Masela Block

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif said steps to accelerate the project so that the impact of the Masela Block's presence could be felt earlier, especially in terms of revenue.

Arifin Tasrif 

"In order to get revenue, if possible in 2026," said Minister Arifin.

The Head of the Special Task Force for Upstream Oil and Gas Activities (SKK Migas) Dwi Soetjipto said the acceleration of the project was allowed after there was certainty about land acquisition. The initial schedule for construction starts in 2022, but we are committed to accelerating. Land acquisition, which has a target of two years, can be targeted for one year, "Dwi said.

Dwi Soetjipto

The land acquisition is targeted to be completed this year, so that next year the construction process can already begin. On the other hand, SKK Migas and the Masela Block operator, Interpex Masela Ltd, also continue to pursue commitments to purchase gas. If gas purchases have reached 80% of the total production capacity, then the final investment decision (FID) process can also begin.

Because if it's already FID, construction can begin. Funding can also be obtained because there are already agreements that have been pursued, "explained Dwi.

According to him, in working on the Masela project, the Dual-Feed scheme will be adopted in which the Engineering Procurement Construction (EPC) and Ont End Engineering Design (FEED) processes are carried out hand in hand. What is clear is that until now the tender process is still ongoing to determine the project implementation contractor.

Nevertheless, Dwi did not want to mention further about this tender. SKK Migas was asked to prioritize lead consortium handled by the Iokal company during dual FEED and EPC for the LNG Plant and Floating Production Storage & Offloading (FPSO) in the Abadi Gas Field project, Masela Block, Timor Sea, Maluku.

The Executive Director of the Association of the Energy and Oil and Gas Supporting Energy Business Association, Kamaluddin Hasyim, admitted that he received the news from SKK Migas asking the lead consortium, not from a local company, but to prioritize international companies.

Kontan, Page-14, Friday, Feb 21, 2020

Masela's New Round

Finally, there began to shed some light on the future of gas from the Abadi Field, Blok Asela, in Maluku. PT Perusahaan Listrik Negara (PT PLN Persero) and PT Pupuk Indonesia (Persero) signed a memorandum of understanding on gas purchases with Inpex Corporation on Wednesday (2/19/2020) night in Jakarta. This is the first step in a long journey on how natural resources in Indonesia should be managed.

The Abadi Field on the Masela Block

The Abadi Field on the Masela Block is another blessing from God for this country. Discovered in 1998, proven reserves of Masela gas 18.5 trillion cubic feet. Planned for production in 2027, the Masela Block will produce 9.5 million tons of liquefied natural gas (LNG) per year and 150 million standard cubic feet per day (MMS CFD) of natural gas.

Even more detailed, the natural wealth is managed with a capital of 19.8 billion US dollars or equivalent to Rp. 267 trillion. The government calculation shows that the total gross revenue from the Masela Block will reach 118.41 billion US dollars or nearly Rp 1,600 trillion during operation. The share of the country will reach 38.9 billion US dollars or Rp 525 trillion. The remainder is the contractor's portion and the recovered operating costs (cost recovery).

the Arun gas field in Lhokseumawe, Aceh

How can you make Masela's fate unlike other natural resource-producing regions in Indonesia? As a comparison, the Arun gas field in Lhokseumawe, Aceh. Starting in production in 1979, Arun gas was exported to Japan and South Korea. Arun was recorded as the largest natural gas producer in the world in 1990 with a production capacity of 1.5 million tons per year.

As it was written in this column on December 7, 2019, the Arun gas well is now dry and has stopped operating since October 2014. So, what is the Arun gas yield? Based on statistical data, the poverty rate in Aceh as of March 2019 was 15.32 percent, far above the national average in the same period of 9.41 percent.

The Human Development Index (HDI) in Aceh in 2018 is 71.19 or slightly below the national HDI of 71.39 Arun should be a lesson for Masela. How abundant natural wealth turned out not to be able to fully improve the lives of its people. That is because natural wealth is seen as a commodity-producing foreign exchange, not the capital for driving domestic development.

The matter of managing natural resources is not a trivial matter. Moreover, Masela is much bigger than Arun. The management is definitely more complicated. The signs have been seen when the polemic decided whether the Masela Block gas should be managed offshore or processed at an onshore refinery several years ago. Finally, the Masela gas was decided to be processed at the mainland refinery.

PT Perusahaan Listrik Negara (PT PLN Persero)

The memorandum of understanding is already in the right direction. Its natural gas is the source of energy for PLN's power plants. While the rest is used to support the fertilizer industry. Indeed, the memorandum of understanding is not final and binding like a gas sale and purchase agreement. At least this is the first step of a long journey ahead.

For PLN, the use of gas from Masela can replace fuel oil for electricity generation. While for the fertilizer industry, gas becomes a vital raw material. Gas from Abadi Field is piped directly to the fertilizer plant. This means that fertilizer plants must be built on land or on the island around sources of gas capable of providing new jobs.

Once again, Arun must be a lesson for Masela. Gas must be a source of energy to empower the economy in the country, not sold to generate foreign exchange. Both the regional and central government must have a long-term vision so that the Masela Block does not suffer the same fate as the Arun Block. 

Kompas, Page-13, Friday, Feb 21, 2020