Hard Work in the Upstream Oil and Gas Industry

 

Although the oil and gas industry is still challenging, the Special Task Force for Upstream Oil and Gas Business Activities or SKK Migas still targets 14 upstream projects to start operating this year.

SKK Migas Operations Deputy Julius Wiratno said that this year, there were 12 upstream oil and gas non-PSN (National Strategic Projects) projects that were targeted to start operating or onstream. The number is an increase of one project compared to last year's target.

Blogger Agus Purnomo in SKK Migas

"There will be 12 non-PSN projects on stream with a project value of US $ 354 million and the potential for additional oil production of 27,000 bpd and 492 MMscfd of gas," he said.

Meanwhile, the two PSN projects that will be onstream in 2021 are the Jambaran Tiung Biru project by PT Pertamina EP Cepu (PEPC) and the Tangguh Train-3 project by BP. 

PT Pertamina EP Cepu (PEPC)

    The Jambaran Tiung Biru project is projected to be onstream in the fourth quarter of 2021. The project work as of the third quarter of 2020 still reached 74.28% of the target of 88.28%. 

The Jambaran Tiung Biru Oil Field

    Similar to the Tiung Biru Jambaran Project, the Tangguh Train-3 project is projected onstream in the fourth quarter of 2021. As of September 2020, the progress of Tangguh Train-3 onshore work has reached 88.27%, and offshore has reached 98.27%.

the Tiung Biru Jambaran Project

"Apart from the difficulties of the Covid-19 pandemic, we are still targeting onstream at the end of 2021," he said.

Although SKK Migas is optimistic that the work plan in the upstream oil and gas sector will proceed as planned, a number of challenges, particularly those affecting the project's economy, are still looming. The government is also considered to have to be more active so that a number of oil and gas projects whose work is constrained can be realized immediately. 

    So far, there are two upstream oil and gas projects that are still unclear because the company plans to release its participation, namely Shell in the Masela Block Abadi field project and Chevron in the Indonesia Deepwater Development (IDD) project.

Trisakti University teaching staff Pri Agung Rakhmanto explained that in the case of the Masela Block project, the government needs to be more active to play a role in obtaining gas buyers. Meanwhile, in the IDD project, middle ground and a compromise must be found in terms of project economics. 

    An observer of the energy economy from Gadjah Mada University Fahmy Radhi is of the opinion that the government should step in so that the Masela Block construction can be completed on time, including in land acquisition to build a pipeline network. This is an important part needed to distribute the gas produced from the Abadi field.

"The challenge is completing the construction and pipeline infrastructure for gas distribution from the Masela Block to consumers. With great prospects, it is not difficult for Inpex to find investors to replace Shell, "he said.

The Executive Director of the National Oil and Gas Companies Association (Aspermigas), Moshe Rizal Husin, assessed that the homework that the government still has to do is to revive the investment climate in the upstream oil and gas sector. Meanwhile, based on SKK Migas data, the realization of upstream oil and gas investment in 2020 only reached the US $ 10.21 billion, lower than the target of US $ 12.1 billion. For this year, SKK Migas is targeting upstream oil and gas investment of US $ 12.3 billion.

"There must be a significant breakthrough and commitment from the government that creates certainty. The oil and gas business is long-term and has a very large multiplier effect, ”said Moshe.

Moshe hopes that the condition of the upstream oil and gas industry this year can run better with stable oil prices at a level above the US $ 50 per barrel or even could improve to the level of US $ 60 per barrel in the third quarter of 2021.

KEEP PRODUCTION

In other developments, the development program in the Mahakam Block will run more aggressively in order to reduce the rate of natural production decline. SKK Migas has approved the work plan of PT Pertamina Hulu Mahakam (PHM) in 2021 with more drilling activities compared to 2020. Thus, production in the Mahakam Block in 2021 is expected to increase with more massive and aggressive optimization.

Deputy of Finance and Monetization of SKK Migas Arief S. Handoko said that if production from the Mahakam Block drops, domestic LNG production will also decline. However, PHM will get incentive approval so that production is maintained.

Merakes Field By ENI Italy

"The possibility of production stays, even increases. In addition, there is a new Merakes field that will contribute so that LNG production will increase, ”he explained.

Agus Amperianto

Likewise, General Manager of PHM Agus Amperianto said that his party is optimistic that it can maintain production in the Mahakam Block by optimizing work in the field development operations that have been approved by SKK Migas.

"Currently, what is possible for Mahakam to do is how to survive in times of crisis," he said.

He added that this year there are a number of efficiency programs, including reducing the operating costs of the Mahakam Block effectively and efficiently. In addition, PHM will also strengthen operational activities through collaboration, strengthening knowledge management, and organizational transformation. 

    Based on the 2021 work program and budget (WP&B), PHE will carry out 73 development well drilling activities and two exploration wells drilling. Meanwhile, as of December 31, 2020, the realization of PHE's oil and gas production was still above the target.

Oil and condensate production was recorded at 26,363 bpd or 102% of the revised WP&B of 25,722 bpd. Meanwhile, gas production reached 606 MMscfd or 103% compared to the revised WP&B of 588 MMscfd.

Bisnis Indonesia, Page-4, Tuesday, Jan 5, 2021

HCML guarantees Availability of Gas Supply During Pandemic

 

Husky-CNOOC Madura Limited (HCML) ensures the availability of gas supplies during the pandemic. Production continues under strict health protocol standards. In carrying out field projects, HCML applies the same health protocol and understanding to all workers and contractor workers. They always coordinate with the Health, Safety, Security and Environment (HSSE) Department team to get medical attention.

"All of this is a form of HCML's commitment to contribute in securing the national gas supply during this difficult time," said Hamim Tohari, Manager of the HCML Regional Office.

Not only does it continue to produce with strict health standards, but HCML also continues to distribute CSR (Corporate Social Responsibility) to a number of villages around the HCML working area in the Sampang Madura Regency area. These community programs cover areas that are basic needs of society, namely economy, education, health, and infrastructure.

Hamim said HCML is committed to being a partner of the local government in developing the community. "We will always support regional progress. Especially on the momentum of the 397th anniversary of Sampang Regency," he said.

The HCML participation fund is a form of that care and concern. It is hoped that it can help the Sampang government in improving the welfare of residents in the village.

"For this reason, HCML hopes that the support of all stakeholders can help smooth the production of HCML natural gas in the waters of the Madura Strait," he said.

As is well known, in certain seasons there are often misunderstandings between fishermen and companies. In certain months, there are some fishermen who keep their activities within a limited and forbidden radius in the oil and gas field. In fact, this is very dangerous for operations and fishermen if there is a sudden increase in gas pressure.

"For that, in the future, we really hope for the support of all stakeholders to be able to provide understanding to fishermen regarding this matter," said Hamim.

Duta Masyarakat, Page-16, Monday, Jan 4, 2021

SKK Migas Wait for Eni

 

The Special Task Force for Upstream Oil and Gas Business Activities or SKK Migas awaits Eni as a potential replacement partner for Chevron in the Indonesia Deepwater Development (IDD) project in East Kalimantan. Meanwhile, PT Chevron Pacific Indonesia is said to be releasing the management of the IDD project in the near future and the strategic partner who is said to have the most potential to replace him is Eni.

Eni.

"Eni is still discussing the commercial. The hope is that January 2021 will have an answer. This is what we will wait for, "said Fatar.

Dwi Soetjipto

Head of SKK Migas Dwi Soetjipto said that Eni was one of the potential partners who could replace Chevron in the IDD project considering Eni's facilities in Muara Bakau and Merakes could be integrated. In the IDD project, Chevron acts as operator and majority shareholder of 63%. Chevron is working on this deep sea oil and gas project with other joint venture partners, namely Eni, Tip Top, PT Pertamina Hulu Energi (PHE), and partners in Muara Bakau.

Blogger Agus Purnomo in SKK Migas

This project will combine four fields, namely Bangka, Gehem, Gendalo, and Gandang Fields. The Gehem, Gendalo, and Gandang fields are included in the Ganal Block. In another development, the process of releasing Shell Upstream Overseas Ltd.'s participating interest (PI) The Masela Block Abadi Field project is projected to be completed by the end of 2021. The PI to be released is already in demand by a number of parties although it has not been specifically mentioned by SKK Migas. Meanwhile, the Abadi Masela Field project is a large project with an estimated investment of US $ 19.8 billion. Therefore, the PI release process may not proceed quickly.

In its development, Inpex Masela Ltd. as the operator has submitted a document of environmental impact analysis (amdal) for the Abadi Masela LNG project to the Ministry of Environment and Forestry. Act. Inpex Masela Corporate Communication Manager Moch N. Kurniawan said that SKK Migas and Inpex had submitted the EIA documents for the Abadi LNG project on December 18, 2020. This is in accordance with SKK Migas directives for the acceleration of the Abadi LNG National Strategic Project. SKK Migas Wait Eni

The Special Task Force for Upstream Oil and Gas Business Activities or SKK Migas awaits Eni as a potential replacement partner for Chevron in the Indonesia Deepwater Development (IDD) project in East Kalimantan. Meanwhile, PT Chevron Pacific Indonesia is said to be releasing the management of the IDD project in the near future and the strategic partner who is said to have the most potential to replace him is Eni.

"Eni is still discussing the commercial. The hope is that January 2021 will have an answer. This is what we will wait for, "said Fatar.

Head of SKK Migas Dwi Soetjipto said that Eni was one of the potential partners who could replace Chevron in the IDD project considering Eni's facilities in Muara Bakau and Merakes could be integrated. In the IDD project, Chevron acts as operator and majority shareholder of 63%. Chevron is working on this deep sea oil and gas project with other joint venture partners, namely Eni, Tip Top, PT Pertamina Hulu Energi (PHE), and partners in Muara Bakau.

This project will combine four fields, namely Bangka, Gehem, Gendalo, and Gandang Fields. The Gehem, Gendalo, and Gandang fields are included in the Ganal Block. In another development, the process of releasing Shell Upstream Overseas Ltd.'s participating interest (PI) The Masela Block Abadi Field project is projected to be completed by the end of 2021. The PI to be released is already in demand by a number of parties although it has not been specifically mentioned by SKK Migas. Meanwhile, the Abadi Masela Field project is a large project with an estimated investment of US $ 19.8 billion. Therefore, the PI release process may not proceed quickly.

In its development, Inpex Masela Ltd. as the operator has submitted a document of environmental impact analysis (amdal) for the Abadi Masela LNG project to the Ministry of Environment and Forestry. Act. Inpex Masela Corporate Communication Manager Moch N. Kurniawan said that SKK Migas and Inpex had submitted the EIA documents for the Abadi LNG project on December 18, 2020. This is in accordance with SKK Migas directives for the acceleration of the Abadi LNG Abadi National Strategic Project.

Bisnis Indonesia, Page-4, Monday, Jan 4, 2021

Upstream Oil and Gas Successfully Recorded Excellent Performance

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) has managed to record brilliant performance throughout 2020 by achieving several targets set by the government.

Blogger Agus Purnomo in SKK Migas

It is recorded that the national upstream oil and gas sector produced five impressive achievements in the aspects of the Reserve Replacement Ratio (RRR), oil and gas lifting, cost recovery control, state revenues, and completion of upstream oil and gas projects.

At the end of 2020, oil lifting was recorded at 706 thousand barrels of oil per day (BOPD) or 100.2 percent exceeding the target of the Revised State Budget (APBN-P) which was set at 705 thousand BOPD.

Meanwhile, gas lifting was 5,461 million standard cubic feet per day (MMSCFD), slightly below the APBN-P target of 5,556 MMSCFD or reached 98.3 percent. As for state revenues, the figure achieved was US $ 8.4 billion, or 141 percent of the target set at the US $ 5.86 billion.

Dwi Soetjipto

"2020 is a difficult year for all business actors, especially in the upstream oil and gas sector, apart from being affected by the Covid-19 pandemic, we are also overshadowed by low world oil prices. However, thanks to hard work with KKKS (Cooperation Contract Contractors), in the end, the upstream oil and gas industry succeeded in exceeding several targets set by the government. The contribution of this industry is expected to help the national economy which is also affected by the pandemic, ”said the head of SKK Migas, Dwi Soetjipto.

Dwi added that another achievement was that SKK Migas was able to complete 15 onstream projects out of the 11 targeted onstream projects or 136 percent. Of these 15 projects, the potential for additional oil production is 9,182 BOPD and gas of 111 MMSCFD. The upstream oil and gas investment reached the US $ 10.21 billion and cost recovery control was US $ 8.12 billion according to the government's target.

According to the Deputy Head of SKK Migas, Fatar Yani Abdurrahman, during the 2020 period, there were several important milestones that were achieved including the completion of 24 PSC Side Letters and 61 LoAs and Amendments to the Natural Gas Sale and Purchase Agreement (PJBG) related to gas price adjustments in accordance with the Regulation of the Minister of Energy and Mineral Resources No. 89K / 2020 and 91K / 2020.

"The total adjusted gas reaches 2,601 British thermal units per day (BBTUD), consisting of 1,205 BBTUD for the downstream industry and 1,396 BBTUD for the State Electricity Company (PLN). This gas price adjustment aims to have an economic impact on the country through growing downstream industrial activities and reducing the burden of electricity subsidies, "he explained.

In addition, SKK Migas also successfully completed the Heads of Agreement (HoA) for the transition to the Rokan Block on September 28, 2020.

PT CPI (Chevron Pacific Indonesia)

"With the implementation of the HoA, PT CPI (Chevron Pacific Indonesia) can conduct drilling to maintain Rokan production until the end of the contract," explained Fatar.

Sakakemang Block

Fatar added that the first Plan of Development (POD) for the Kaliberau Field, Sakakemang Block was also approved by the government on December 29, 2020. With this approval, the realization of the Reserve Replacement Ratio (RRR) stands at 101.6 percent with additional reserves of 705.16 MMBOE.

Meanwhile, based on this brilliant record, Fatar said SKK Migas was optimistic in welcoming 2021. He said that his party had finished compiling work programs and budgets with KKKS to achieve government targets.

"We know that the oil lifting target that has been set has not changed from this year, which is 705 thousand BOPD. To ensure there is no decline in production, SKK Migas is trying to carry out massive, aggressive and efficient activities. We are also determined, in 2021 there is no decline in national oil and gas production, "he concluded.

Bhirawa, Page-10, Monday, Jan 4, 2021

Potential The Rokan Block Still Becomes SKK Migas Mainstay

    The Rokan Work Area (WK) which will be managed by the Cooperation Contract Contractor (KKKS) Pertamina Hulu Rokan in August 2021 still has large potential reserves. Therefore, the success of managing the block is one of the keywords for success towards achieving the target of 1 million BOPD (barrels of oil per day) and 12 BSCFD of gas (billion cubic feet per day) by 2030.

    That is the summary of the Focus Group Discussion entitled "Guarding the Transition of Rokan, Maintaining National Production" which was held online in Jakarta (23/11). 

Satya Widya Yudha

    The FGD presented expert advisors to the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Satya Widya Yudha, Head of the Formality Division of SKK Migas, Didik S. Setyadi, Head of the Management of Goods and Services Procurement Division of SKK Migas, Erwin Suryadi, IATMI Practitioners, Hadi Ismoyo, National Oil and Gas Observer, Mukhtasor, Fahmy Radhi, and Abdul Muin.

    Satya said the potential oil reserves from WK Rokan are estimated to be 2 billion barrels. 

The Rokan Work Area (WK), Chevron

"Taking into account the existing potential, the WK Rokan will remain the backbone of national oil and gas production for a long time, through existing fields, field optimization, optimization of a waterflood, steam flood, and chemical EOR methods. So this working area will also be a mainstay to support the production target of 1 million barrels in 2030, "said Satya.

    Seeing this opportunity, SKK Migas is trying to make the transition period until 2021 run smoothly. This effort is not only a transition related to production operations but also other crucial matters, namely land-related permits.

Blogger Agus Purnomo in SKK Migas

"In the identification of SKK Migas, there is land that will be the drilling location but has not been certified as belonging to CPI (Chevron Pacific Indonesia), there is also the land that is still owned by the community. Permit readiness is absolutely passed because drilling equipment even though it is ready will be constrained if the land which is the drilling location is still controlled by other parties or the legality status is unclear, "said Head of the Formality Division of SKK Migas, Didik S. Setyadi.

Chevron Pacific Indonesia

    As an effort by SKK Migas to handle this matter, Didik said that his party is currently encouraging licensing to remain attached to the old operator. 

"Through the ODSP (One Door Service Policy), SKK Migas and CPI will resolve the licenses that are still neglected, this is so that while waiting for new operators to enter, operations will not stop. November 26, 2020, the list of licenses required by CPI must be final, "he explained.

    A similar sentiment was also conveyed by the Head of the Procurement Division of SKK Migas, Erwin Suryadi. 

“SKK Migas already has experience assisting the transfer of management of non-Pertamina CAs to Pertamina. We make learning each case so that when we manage the transfer of management of WK Rokan, we are sure that investors can still be implemented, "he said.

The Rokan Block Working Area Oil and Gas

    National oil and gas observer, Mukhtasor, said the transfer of management was quite complicated because the cooperation contract did not regulate matters related to management transfer. 

"One of the articles in the Ministerial Regulation ESDM # 15 of 2015 states that new operators can enter 6 months before the contract expires, this is not effective and will not be able to maintain production when new operators enter, "he said.

    However, his party appreciates the steps taken by CPI and SKK Migas which are trying to guard the transfer of management well, because there are many things that are not regulated but are done by CPI and SKK Migas so that the transfer of management runs well. One of them is the preparation of the 2020 AMDAL/IEA document. 

"As a resource person from the Ministry of Environment and Forestry in the preparation of upstream oil and gas, I am very proud of the proposed AMDAL," he said.

"Governance in the transitional period must be improved and currently is outside the realm of SKK Migas. This is the right momentum so that the authority of SKK Migas in terms of the transition to the end of the CA can be lifted so that the future transition can be carried out better, "continued Mukhtasor.

Importance of Investment

    The speakers saw that efforts to increase production at the Rokan WK could be realized if there was sufficient investment needed. Oil and gas practitioner, Hadi Ismoyo conveyed, it takes a strong commitment from Pertamina and the government, to invest tens of millions of dollars because the activities carried out must be quite massive.

    Gadjah Mada University energy economy observer, Fahmi Rady hopes that Pertamina will focus on concentrating its strength in WK Rokan, whose potential is still very large and the results are certain. Meanwhile, another upstream oil and gas observer, Abdul Muin, added that the way to increase oil and gas production in WK Rokan is through aggressive investment and must be realized according to commitments.

"So, if Pertamina has difficulties related to investment costs, it is better to open up options to cooperate with other companies. This is commonly done by the upstream oil and gas industry because they will also share risks and collaborate according to their respective advantages, "concluded Muin.

Source: Press release SKK Migas, Tuesday, Nov 24, 2020

21 EOR Projects will be Upstream Until 2030

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) plans 21 enhanced oil recovery (EOR) projects to start operating until 2030. EOR is planned to support the achievement of the oil production target of 1 million barrels per day (BPD)  by 2030.

Blogger Agus Purnomo in SKK Migas

Head of SKK Dwi Soetjipto said, if there is no effort, national oil production will continue to decline in the future. In order to achieve the target of 1 million bpd by 2030, a number of strategies have been formulated by his party, namely accelerating the transformation from reserves to production, exploration, and implementation of EOR activities.

Dwi Soetjipto

"A total of 21 EOR projects using polymers, surfactants, and CO2, are planned to start onstream until 2030," he said.

He explained that his party had identified which oil and gas fields this EOR activity would apply. In SKK Migas data, there are 42 oil and gas fields that are candidates for this EOR activity. Unfortunately, the implementing agency for upstream oil and gas activities did not specify which fields would start producing additional production by 2030.

"We have identified which arenas [for EOR], and what the reserves and production are like," said Dwi.

The 42 oil and gas fields are Minas, Melibur, Bangko, Medium Water, Widuri, Bajubang, Kenali Asam, Batang, Tanjung, Bekasap, Guruh, Ramba, Jatibarang, Zelda, Eman, Walio, and Duri Ring fields. Apart from that, there were Krisna, Rantau, Limau PQ, Tanjung Tiga Barat, Zulu, Pedada, Rantau Bais, Jirak, Balam South, Tempino, Farmers, Handil, Gemah, Kaji May, Prosperous, Kulin, Zamrud, and Raja fields.

Referring to SKK Migas data, the EOR project is targeted to start increasing national oil production in 2024 with two projects starting onstream. Furthermore, in 2025 and 2027, two projects each are targeted to start producing. After that, a total of 6 EOR projects are planned to start operating in 2028, 5 projects in 2029, and 4 projects in 2030.

Meanwhile, the rest of the EOR projects are scheduled to start production in 2031-2040. In detail, as many as 8 EOR projects will operate in 2031, 5 projects in 2032, 3 projects each in 2033-2034, 2 projects in 2035, 1 project in 2036, 4 projects in 2037, 1 project in 2038, and finally 4 projects by 2040.

Secretary-General of the Indonesian Petroleum Engineering Experts Association (IATMI) Hadi Ismoyo said, there is indeed the potential for additional oil production from EOR activities. However, not only technical aspects but the government must also pay attention to economic aspects so that additional production can be realized.

"The government must open up and provide extraordinary support, including from the fiscal side," he said.

The Rokan Block Chevron

Rokan Block

Dwi added, one of the large potential additional oil production from EOR is expected to come from the Minas Field, Rokan Block. Referring to SKK Migas data, Minas Field will become the backbone of national oil production with production reaching 52 thousand bpd in 2030.

"We hope that EOR Minas can be executed. We depend on Pertamina and partners to make it happen, "he said.

Hadi added that it should be focused on fields that have the potential to generate large amounts of additional oil production, one of which is the field in the Rokan Block. This is because EOR activities are not necessarily economical if they are applied in small fields.

"In Rokan, the original oil base is 8.5 billion barrels. If we talk about 10% recovery, we will already get 850 million barrels, ”he said.

PT Pertamina Hulu Energi (PHE)

Director of Strategic Planning and Business Development of PT Pertamina Hulu Energi (PHE) John H Simamora said, in the EOR planning by SKK Migas, the Rokan Block was included in it. 

PT Chevron Pacific Indonesia 

    He has entrusted the government and SKK Migas with regard to the EOR project, primarily for the implementation of the EOR test which has been carried out by PT Chevron Pacific Indonesia as the current Rokan Block operator. However, his party is concerned about the economic aspects of the EOR project in the Rokan Block if you see the current oil price developments.

"If the price of oil is still like today, I myself don't think we can run EOR economically," he said.

However, this could be different if the government had other perspectives in implementing this EOR. One of them, if the government will provide incentives to increase the economy of the EOR project.

"But primarily, we want oil prices to improve," said John.

When signing the Rokan Block contract, the implementation of EOR activities was one of Pertamina's commitments. This is as stated in the Decree of the Minister of Energy and Mineral Resources 1923K / 10 / MEM / 2018. Some of these activities are the US $ 4 million EOR study, US $ 247 million stage-1 CEOR 7 pattern, and the US $ 88.6 million stage-1 steam flood Kulin or Rantau Bais.

Investor Daily, Page-10, Monday, Nov 23, 2020

Sakakemang Gas Project Development Plan Approved Soon

 

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that the Sakakemang Block's plan of development (POD) will be approved in the near future.

Blogger Agus Purnomo in SKK Migas

Head of SKK Migas Dwi Soetjipto said that his party and Repsol had agreed on the gas price for the Sakakemang Project in line with the gas price policy set by the government. Not only that, but the gas project internal rate of return (IRR) has also been agreed upon. 

Sakakemang Block

    Thus, the POD of Sakakemang Block has been discussed by Repsol with his party and submitted to the Ministry of Energy and Mineral Resources (ESDM).

"The current situation, the proposal [POD] is already in the Ministry of Energy and Mineral Resources. We hope it will be approved in the next 1-2 weeks, "he said.

Dwi Soetjipto

The preparation of POD for Sakakemang Block was hampered by the proposed gas price of US $ 7 per million British thermal units (million British thermal unit / MMBTU) by the developer. 

    Meanwhile, on the other hand, the government has issued Decrees of the Minister of Energy and Mineral Resources, ESDM Minister Regulation number 89K / 2020 and 91K / 2020. This regulation limits the gas selling price to a maximum of US $ 6 per MMBTU for certain industries and power plants. This policy is valid for the next three years and can be re-evaluated.

"We have done a study, and we are also following government rules and regulations for domestic gas prices," said Dwi.

Regarding the POD being prepared, he explained, not all gas reserves in the Sakakemang Block will be developed. For Phase, I development, the gas reserves being developed are only around 0.5 trillion cubic feet (trillion cubic feet / TCF) of the total initial findings of 2 TCF. Meanwhile, the gas production plan is 85 million cubic feet per day (million standard cubic feet per day / MMscfd).

Repsol

Previously, Repsol Group through its affiliate, Talisman Sakakemang BV, had signed a memorandum of understanding (MoU) with PT Perusahaan Gas Negara (PGN) Tbk for gas supply from the Sakakemang Block. This MoU has been in effect since July 12, 2019, and will be followed up with the signing of the Gas Sales Agreement (GSA) by the parties. Repsol SA discovered gas reserves in Sakakemang Block, South Sumatra with an estimated reserve of at least 2 trillion cubic feet through drilling the KBD-2X well at the beginning of last year.

In order to accelerate gas production, the development of this block will be carried out in stages with a reserve certification of 1 trillion cubic feet first. The government hopes that the Sakakemang Block can operate next year. However, in the 2019 second-quarter performance earning call, Repsol SA CEO and Executive Director Josu Jon Imaz San Miguel said he was optimistic that the Sakakemang Block production could be accelerated in 2022. 

    However, in a conference call for the performance of the first quarter of 2020, Imaz admitted that there were delays in the development of the Sakakemang Block. In the Sakakemang Block, Repsol holds a participating interest (PI) of 45% as well as the block operator. Meanwhile, its partners, Petronas, have a participating interest of 45% and MOECO 10%.

Investor Daily, Page-10, Saturday, Nov 21, 2020

Pertamina's Plan to Release Oil and Gas Block Shares is Hampered by Regulations

    PT Pertamina (Persero) 's plan to release a majority share ownership (participating interest / PI) in several oil and gas blocks that it manages has not been implemented due to regulatory constraints. Referring to the prevailing regulations, the company is not allowed to release more than 41% shares.

PT Pertamina Hulu Energi (PHE)

    Director of Strategic Planning and Development of PT Pertamina Hulu Energi (PHE) John H Simamora said that his party has categorized all oil and gas blocks that it manages into several clusters. One of these clusters consists of oil and gas blocks that have the potential to release the majority of their share ownership to another company.

"Some of this needs to be divested, but the current law does not regulate this. We are still in discussion with the government to divest this oil and gas block, so it is still a long way to go, ”he said.

    He explained that in the current regulations, Pertamina can only release PI ownership of a maximum of 41%. In fact, it does not always need to hold such large shares or the operatorship share in all the blocks it manages. Some of the oil and gas blocks to be divested are actually minus for the company. On the other hand, his party has other priorities in developing upstream assets.

"We want to focus on exploration and field optimization, including the EOR (enhanced oil recovery) study," said John.

    Currently, his party is still discussing the PI divestment regulation issue with the government. The number of oil and gas blocks whose shares are released also has the potential to change depending on the development of oil prices. If the price of oil improves in the future, the number of oil and gas blocks to be divested will be smaller.

"Regarding this regulation, we discussed with the Ministry of Energy and Mineral Resources and BUMN, and this can be resolved," he said.

    Previously, Pertamina had divided all of its oil and gas blocks into four clusters based on the number of reserves and the remaining oil and gas block production period. The first cluster includes oil and gas blocks that have a remaining oil and gas production period of more than 10 years. 

    The second cluster is the oil and gas block which can still be produced in the next 5-10 years. The third cluster is an oil and gas block that Pertamina can cooperate with for the medium scale.

    Meanwhile, the last cluster is an oil and gas block, which is actually more suitable to be managed by an oil and gas company smaller than Pertamina. This last cluster is planned to be released by the company. 

    Energy Saver from Trisakti University Pri Agung Rakhmanto assessed that the PI divestment by Pertamina was a normal corporate action for oil and gas companies. This step is usually taken to optimize the investment portfolio.

"In order to focus on perspective and provide a high economy," he said.

    For the national upstream oil and gas industry, Pertamina's strategy also opens up opportunities for other oil and gas companies with different standards to take over the management of these oil and gas blocks. Although, whether the divestment will be attractive or not still depends on the current market.

"It remains the market which will determine later, whether it is considered attractive by other actors or not," explained Pri Agung.

    Currently, Pertamina manages as many as 91 oil and gas assets at home and abroad through several of its subsidiaries. There are 56 oil and gas blocks in the country that are worked on by PT Pertamina Hulu Energi to manage 50 oil and gas blocks, PT Pertamina EP 1 oil and gas block, PT Pertamina EP Cepu (PEPC) 1 block, PT Pertamina EP Cepu (PEPC) ADK 1 oil and gas block, PT Pertamina Hulu Indonesia 3 oil and gas blocks.

    While abroad, as many as 35 assets are managed by and PT Pertamina Internasional EP. Referring to PHE data, this year, the company's oil production is targeted at 412 thousand barrels per day (BPD) and gas 2,710 million cubic feet per day (million standard cubic feet per day / MMscfd). As of August, the realization of oil production was recorded at 414 thousand barrels per day (BPD) or exceeded the target and gas was 2,670 MMscfd or 98.5% of the target.

Investor Daily, Page-10, Saturday, Nov 21, 2020

The IDD project is targeted to start in 2021

 

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) targets the Indonesia Deepwater Development (IDD) project to start rolling again next year. 

Blooger Agus Purnomo in SKK Migas

    This follows the transfer of management of the IDD Project to Eni Indonesia which is expected to be completed by the end of this year.

Eni Indonesia

Head of SKK Migas Dwi Soetjipto said Chevron Indonesia, as the operator of the IDD Project, is still in the discussion stage regarding the transfer of participating share ownership to Eni Indonesia. The administrative process for the transfer of share ownership and management rights is expected to be completed this year.

Dwi Soetjipto

"So we hope that next year there will be changes to the plan of development / POD proposed after being managed by Eni," he said.

He explained that the POD changes were needed because Eni had managed two oil and gas blocks located near the IDD Project, namely the Muara Bakau and East Sepinggan blocks. Thus, the development of the IDD Project can later be integrated with the facilities that Eni already has in the two blocks. 

the IDD Project Chevron

    One of them is the utilization of the floating production unit / FPU Jangkrik block facility. So, IDD development will change from Chevron's plan or POD, ”said Dwi.

Working Area of Chevron

Furthermore, with the integration of these facilities, it is hoped that the development of the IDD Project can be faster and more efficient.

"We are optimistic that the development of IDD will be better and more efficient because Eni already has facilities. We are still targeting to start onstream in 2025, "he added.

Referring to SKK Migas data, the IDD project is targeted to start operating in the fourth quarter of 2025. This project is targeted to reach a peak gas production of 844 million standard cubic feet per day / MMscfd and 27 thousand BPD of oil. The project investment is estimated at the US $ 6.98 billion. This IDD project combines two oil and gas fields, namely Gendalo Field, Ganal Block, and Gehem, Rapak Block.

Ganal Field by ENI

Dwi said that the government supports the extension of the production sharing contract / PSC for oil and gas blocks that are included in the IDD Project, namely the Meeting Block and Ganal. This is because the Rapak Block contract will end in 2027 and the Ganal Block will be completed in 2028. Without the extension, he admits that oil and gas companies will find it difficult to develop the IDD Project.

"Although later asking for approval from the government [regarding the extension of the PSC]. But the government will support the extension if the contractor is serious about carrying out the project, "he said.

In the IDD Project, Chevron is currently the operator and majority shareholder of 63%. Chevron is working on this deep-sea oil and gas project with other joint venture partners, namely Eni, Tip Top, PT Pertamina Hulu Energi (PHE), and partners in Muara Bakau.

Investor Daily, Page-10, Friday, Nov 20, 2020

Feasibility Study for Dumai Sei Mangkei Pipeline Review

 

The government will complete the connection of the gas pipeline network that will connect Sumatra and Java, one of which is the Sei Mangkei-Dumai Pipe. However, the feasibility study / FS of this project needs to be readjusted to the current situation because it has been prepared since 2014.

Director of Planning and Development of Oil and Gas Infrastructure at the Ministry of Energy and Mineral Resources (ESDM) Alimuddin Baso explained, based on the FS, the pipe was designed to be between 12-28 inches in diameter and the investment cost was estimated at the US $ 483 million. 

    The study has not yet determined the funding scheme that will be used. However, there are two alternatives, namely using state funds such as state investment (PMN), or Public-Private Partnership (PPP).

"PT PGN Tbk has made a feasibility study since 2014 and with the development of these 6 years, it needs to be reviewed again. That must be the main consideration, "he said.

His party is worried that if there is no review, many points that will be connected will be neglected. He explained that the Sei Mangkei-Dumai Pipe was needed to maintain the reliability of the gas supply in North Sumatera and Riau. Currently, the gas supply in the area comes from Grissik and Jambi through the Grissik-Duri-Dumai Pipeline, as well as the Arun LNG Terminal, Block A, NSO / NSB Block via the Arun-Belawan-Sei Mangkei Pipeline.

"In addition, it also encourages the growth of new industrial estates along the Sei Mangkei-Dumai gas pipeline," added Ali.

Referring to the National Gas Balance, Aceh and Northern Sumatra regions obtain gas from Block A, NSO, and NSB, as well as Tangguh LNG. In addition, several projects will begin production, namely Lhokseumawe Block and Gebang Block in 2023, and ENI Jau in 2024. 

ENI

    Meanwhile, the main consumers of gas are PT Pupuk Iskandar Muda (PIM) and electricity. Unfortunately, until now there is no certainty regarding gas demand for the retail industry along with the Sei Mangkei-Dumai Pipe.

"This is an empirical condition and must be observed so that when deciding which scheme to use, it must be prudent. We want something that is decided on that will be executable, not planned. So it is important to discuss it carefully, "said Ali.

However, this pipe can also be used to supply gas to other areas such as Labuhan Baru, Asahan, and Medan, as well as power plants in North Sumatra. The Sei Mangkei-Dumai pipeline is one of three gas transmission pipeline projects proposed by the Ministry of Energy and Mineral Resources which was approved as a National Strategic Project (PSN) which will be revised after the Covid-19 pandemic has passed. 

    The other two transmission pipeline projects are the Cirebon-Semarang Pipe and the West Natuna Transportation System (WNTS)-Pemping Island Pipeline. 

Investor Daily, Page-10, Tuesday, Nov 17, 2020