The Lifting Target of Petroleum Is More Challenging

 

    The pandemic has made the target of 1 million barrels per day of natural oil production by 2030 even more challenging. Apart from exploration, several other strategies will be taken to increase production.

    Until the end of March 2021, the realization of ready-to-sell production or oil lifting was 676,200 barrels per day or still lower than the State Budget (APBN) target of 705,000 barrels per day. The Covid-19 pandemic in 2020 has caused investment in upstream oil and gas to decline drastically and the number of wells drilled. This condition makes the production target of 1 million barrels per day in 2030 even more challenging.

    Likewise, natural gas lifting, which in the first quarter of 2021 was realized as much as 5,539 million standard cubic feet per day (MMSCFD). In the APBN, the target for natural gas lifting is 5,638 MMSCFD. However, natural gas lifting is currently still higher than the realization in 2020 of 5,462 MMSCFD.

Blogger Agus Purnomo in SKK Migas

    Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto, Monday (26/4/2021), said that the decline in oil lifting in the first quarter of 2021 was influenced by the Covid-19 pandemic since last year. Until the end of 2020, investment in the upstream oil and gas sector dropped dramatically and resulted in low Wells drilling to boost production. Last year, there were 240 wells drilled, and this year 616 wells were planned.

"From year to year, the realization of oil lifting has always been lower than the target of the APBN. This year, we strive so that lifting is not much different from last year's realization. The low investment in 2020 due to the Covid-19 pandemic has resulted in a drastic decrease in production, "Dwi said in a press conference on the Upstream Oil and Gas Performance Exposure for the first quarter of 2021 in Jakarta.

    Dwi added, to reach the production target of 1 million barrels per day in 2030, apart from intensifying exploration to find new reserves, several strategies were taken to increase production. The strategy is to optimize production in existing fields, apply enhanced oil recovery (EOR) methods, and accelerate the status of reserves to production.

the Cepu Block

    SKK Migas noted that the Cepu Block in East Java, which is operated by ExxonMobil Cepu Ltd (EMCL), is currently the largest contributor to oil production in Indonesia, which is 213,000 barrels per day. 

the Rokan Block Chevron in Riau

    Next is the Rokan Block in Riau, which produces 165,000 barrels per day. The operation period of the Rokan Block by PT Chevron Pacific Indonesia (PCI) will end in August and the next management will be handed over to PT Pertamina (Persero).

PT Chevron Pacific Indonesia (PCI)

    From the investment side, SKK Migas targets this year's realization to be 12.4 billion US dollars, higher than last year's realization of 10.5 billion US dollars. Until the first quarter of 2021, the realization of upstream oil and gas investment was the US $ 2.4 billion. The state revenue for the same period was 3.29 billion US dollars or 45 percent of the target of 7.28 billion US dollars.

Exploration

    Separately, the Executive Director of the ReforMiner Institute, Komaidi Notonegoro, said that massive exploration is the most important way to obtain new sources of oil and gas reserves in Indonesia. Moreover, the government has repeatedly stated that out of 128 basins in Indonesia, as many as 70 basins have not been studied at all. Apart from that, the government must also be able to create an attractive upstream oil and gas investment climate for investors.

"No more changes in contracts or regulations. This concerns the certainty of trying. If this still happens, investors will rethink investing in Indonesia and it is possible for them to choose other countries that are more attractive, "he said.

    At the end of 2019, Pertamina through its subsidiary, PT Elnusa Tbk, started a two-dimensional seismic survey to find oil and gas reserves in Indonesian waters. This survey, which crosses the sea along 30,000 kilometers, is the largest survey in the Asia Pacific region in the last 10 years. The survey started from the waters around Bangka Island, Bangka Belitung, to the waters around Seram Island, Maluku.

    According to the Head of the SKK Migas Exploration Planning Division Shinta Damayanti, the exploration results by Pertamina are still being evaluated. The government wants the evaluation data to be made public and is scheduled to be known in July. It is stated that from the results of the exploration there are several prospective areas (there are oil and gas reserves).

"Pertamina has conducted a joint study with other parties in East Java and it is estimated that (in that area) will become a new upstream oil and gas working area. The data from the seismic survey will be useful for investors, "said Shinta.

Kompas, Page-9, Tuesday, April 27, 2021

Pandemic Effects Of The Upper Oil and Gas Load

 

The national oil and gas industry is not yet optimally producing significant results in the first quarter of 2021. The realization of ready-to-sell production is still below the target.

Blogger Agus Purnomo in SKK Migas

Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said the realization of ready-to-sell production or oil and gas lifting during the first quarter of 2021 was 1,665.25 Mboepd or 97.3% of this year's APBN target of 1,711.78 Mboepd.

In detail, the realization of oil lifting in the first quarter of 2021 was recorded at 676,200 barrels per day (BOPD), or only 96% of this year's APBN target of 705,000 BOPD. Likewise, the realization of natural gas lifting in the first quarter of 2021 was 5,539 MMScfd, or 98.2% of the APBN target of 5,638 MMscfd.

“From the oil side, the entry point at the end of 2020 is very low. At that time it was 699 MBOPD and because there was a decrease in investment, the level of production was not appropriate. That is one of the factors affecting the performance that was not achieved in the first quarter of 2021, "he said.

Exxon Mobil Cepu Ltd. (EMCL)

Dwi added that oil and condensate production missed plans in several fields. For example in the Banyu Urip field by Exxon Mobil Cepu Ltd. (EMCL) which experienced an increase in water cut and also in the Sukowati Tuban field in East Java by PT Pertamina EP. Dwi said Exxon Mobil Cepu (EMCL) and Pertamina EP contributed to the shortfall in the national lifting target of 10,000 bopd each.

BP

In addition, there has been a decline in the contribution of drilling several wells, namely Pertamina Hulu East Kalimantan and Minarak Brantas Gas. This condition was exacerbated by the unplanned shutdown in the first quarter of 2021 at Train-1 and Train 2 at BP Berau, CPGL Suban Plant, and at BGP Petrochina Jabung.

Petrochina

"We are trying to calculate, the year-end outlook will not reach 705,000 bopd, but we are trying to make a strategy for no decline in 2021. We can get closer as possible," Dwi said.

Pertamina EP

Meanwhile, the failure to achieve the realization of natural gas lifting was also partly due to the inability to achieve Pertamina EP production. In addition, there are differences in assumptions related to the completion of the Tangguh Train-3 project.

Dwi said that the Tangguh Train-3 project is assumed to be completed at the beginning of this year under these assumptions. But in reality, the project is declared to be shifted until the end of 2021 and there is a possibility that it will be completed next year.

Meanwhile, the organizational reshuffle that has taken place within the PT Pertamina (Persero) group is considered to be one of the causes for the low-performance achievement of this state-owned company in the upstream oil and gas sector. According to Dwi, this is a natural fit when there is an overhaul of the organizational structure. The reason is that the investment has not been able to take place smoothly.

“Subholding is a cause and a process. That usually happens, but Pertamina has carried out harmonization, "he said.

Based on SKK Migas data, in the first quarter of 2021, the Pertamina group cooperation contract contractors (KKKS) that did not meet the APBN oil lifting target included Pertamina EP which only reached 98.8% of the target, Pertamina Hulu Energi Oses 89% of the target, and Pertamina Hulu East Kalimantan 83.6%. Meanwhile, for the realization of natural gas lifting, only Pertamina EP did not reach the target of the Pertamina group with a realization of 99.8% of the target.

Dwi said SKK Migas has communicated directly with both the parent and the upstream sub-holding Pertamina regarding the investment process in the upstream oil and gas sector. SKK Migas has asked the state-owned company to speed up its investment process.

"In the last meeting, it has been announced that starting this month, the issue of waiting for FID is no longer allowed and it has been implemented. Pertamina has determined and raised the investment limit that can be made in the subsidiary, "he explained. Pertamina has stated that it is ready to increase its investment to increase operational performance by up to 20% this year.

Pertamina's Senior Vice President for Corporate Communications & Investor Relations Agus Suprijanto said that to achieve this target, Pertamina has set a Capital Expenditure / Capex budget of US $ 10.7 billion in 2021, a drastic increase from last year's CAPEX realization prognosis of US $ 4.7 billion.

Agus explained that from the total CAPEX, as much as 46% will be allocated for upstream oil and gas activities as an effort to ensure an increase in production and oil and gas reserves. The addition of oil and gas reserves is targeted to reach 696 MMboe or nearly four times the target of adding reserves last year.

Meanwhile, 36% of the CAPEX will be allocated to continue the development of refineries and petrochemicals, while the remaining 18% will be used for other business activities, including continuing the development of new and renewable energy.

"The budget shows Pertamina's high optimism to continue to grow and rise amid the Covid-19 pandemic by continuing the projects or business development that had been going on since the previous year and at the same time creating new initiative programs," said Agus.

OLD FIELD

Reforminer Institute founder Pri Agung Rakhmanto argues that lifting is difficult to reach the target because KKKS still continues to rely on old fields, leading to a downward trend.

According to him, the characteristics of the field in addition to the cost per barrel tend to increase and are difficult to predict technically in terms of production operations.

"This is the main technical reason why lifting often does not reach the target. From year to year, we will always struggle with this problem when talking about lifting achievements with the existing fields, "he said.

In connection with the low production of the Pertamina group, Pri Agung assessed that the main cause was not from overhauling the organizational structure through the formation of sub-holding.

"In my opinion, it has nothing to do with the holding sub-holding issue. Lifting is more on short-term managerial issues and operational technical matters, ”he explained.

Executive Director of the National Oil and Gas Companies Association (Aspermigas) Moshe Rizal said that almost all fields in Indonesia have reached their peak production period. So, it is natural for lifting to fall.

Therefore, it needs interventions such as the development of new fields or exploration. In addition, an enhanced oil recovery (EOR) program can be carried out for fields that have entered the secondary or tertiary production phase.

"The problem is that most fields have not prepared the EOR program from an early age so that the development of the EOR program is very expensive and often no longer goes into the field economy," he said.

He added that the low realization of national lifting was also caused by the attitude of investors who are still waiting for the situation to handle Covid-19. Even though the oil price has been very stable above $ 60 per barrel, the situation is still full of uncertainty.

"Investors will focus their investment in areas with lower risk, for example, fields that are already producing and still reduce exploration first," he explained.

Bisnis Indonesia, Page-4, Tuesday, April 27, 2021

the Confusion over Management of the Rokan Block

 

    The government, in this case, the Ministry of Energy and Mineral Resources (ESDM) and SKK Migas, are asked to immediately step in to resolve a number of issues that remain in the process of transitioning the Rokan Block from PT Chevron Pacific Indonesia (CPI) to Pertamina Hulu Rokan. The reason is, according to the management transfer contract, it must be carried out on August 9.

PT Chevron Pacific Indonesia (CPI)

"Transfer of management will be carried out on August 9, 2021. However, it leaves many problems. The EOR issue has not yet been resolved, but the electricity problem has reappeared which will affect the transition process. We ask the Government's firmness to deal with this immediately. The state should not be defeated by private corporations that have the potential to harm the state for their activities so far, "said Executive Director of Energy Watch Mamit Setiawan.

    Mamit even asked law enforcement officials to intervene considering the potential crimes that could harm the state during the electricity and steam leasing process which has been done by Chevron Pacific Indonesia with PT Mandau Cipta Tenaga Nusantara (MCTN).

Chevron

"Chevron's footprint in Indonesia must be investigated until it is clear before the transition process is carried out. Don't let the Rokan Block electricity become scraped (catch a cold), "he joked.

    As is known, Pertamina, through their subsidiary Pertamina Hulu Rokan (PHR) on February 1, 2021, has signed a power and steam sale and purchase agreement with PLN.

"PLN itself has proposed 2 options related to this agreement, namely in the short term until 2024 they have to build transmission and distribution lines," he said.

    This is because so far Chevron has rented electricity and steam from PT Mandau Cipta Tenaga Nusantara (MCTN) since 1998. Ironically, MCTN's ownership is 95% owned by Chevron Standard Limited and 5% by Nusagalih Nusantara. So that it is pointed out that Chevron Pacific Indonesia has carried out transfer pricing since 2008.

"This was disclosed by the Supreme Audit Agency (BPK) in 2006 where Chevron asked the government to return the cost of renting electricity and steam from the government since collaborating with MCTN," he said.

    This process, said Mamit, has the potential to cost the state US $ 210 million. Based on information from SKK Migas, Chevron pays the US $ 80 million annually for electricity and steam leases to MCTN and this is included in the fees that are billed (EOR) back to the government.

"This proves that MCTN's assets must be returned to the state because the government has paid all the investment costs made to build MCTN's electricity and steam facilities," he said.

Investor Daily, Page-10, Monday, April 26, 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

Pertamina Shipping is Targeted to Succeed in ASEAN

 

    One of the government's big agendas is to strengthen the logistics system. To strengthen Indonesia's domestic logistics system that can be seen at the global level is to develop State-Owned Enterprises (SOE/BUMN) in the shipping and logistics sectors. 

PT Pertamina (Persero)

    Through the sub-holding of PT Pertamina (Persero), namely PT Pertamina International Shipping (PIS), the government is trying to revive the world of shipping and logistics. PIS targets to become a global integrated logistic and marine solution company.

"PIS is expected to become an integrated and marine logistics solution company that is respected in the ASEAN (Southeast Asia) region," said Deputy Minister of BUMN I Pahala Mansury.

    Pahala said Pertamina had the strength in this matter because currently PIS had a large number of ships and had very reliable specifications. The government is targeting PIS to have a stronger infrastructure in Southeast Asia. 

    Pahala said that the government has an agenda to find investors to strengthen the PIS business in the future. He said the efforts that would be made were for example to cooperate with the Indonesia Investment Authority (INA) or other strategic partners.

"The government is targeting cooperation with INA or other strategic partners that can be obtained through INA and after that, the company will conduct an initial public offering (IPO)," said Pahala.

    After sailing since 9 February 2021 from JMU Ariake Shipyard, Japan, PIS's giant container ship or Very Large Crude Carrier (VLCC) has arrived in Indonesia and is ready to support the distribution of national energy supplies. This readiness was marked by the inauguration of BUMN Minister Erick Thohir on a ship that was berthed in Semangka Bay, Kota Agung, Tanggamus Regency, Lampung.

Erick Thohir

    Erick conveyed his appreciation for Pertamina's efforts in transforming and presenting value creation so that it could become a global company. He ensured that the government fully supports PIS's steps to become an integrated logistics and marine solution company that plays at the global level.

"Pertamina must return to its heyday in the 70s, become a global player and be ready to compete based on good corporate governance," said Erick.

Nicke Widyawati

    Pertamina President Director Nicke Widyawati said the investment made by presenting two ships, namely Pertamina Pride and Pertamina Prime, is in line with shareholders' directions to go global. Nicke explained that the two ships would serve foreign markets and transport crude from Aramco to Indonesia.

Saudi Aramco

"With our own ships, we have more flexibility because Pertamina has foreign reserves and production of 110 thousand barrels per day," said Nicke.

    PIS President Director Erry Widiastono explained that PIS continues to strive to meet energy needs by continuously creating various innovations as a consumer-oriented shipping company. One of them is presenting the giant tanker VLCC PERTAMINA PRIDE with a capacity of 2 million barrels and has been built at the Japan Marine United (JMU) Shipyard since 2018.

"The PERTAMINA PRIDE VLCC aims to simplify the flow of energy distribution and secure the supply of captive crude needs to Pertamina's refineries on a FOB Ras Tanura-Cilacap basis more efficiently so that it is ready to become the lifeblood of energy distribution for the country," said Ery.

Republika, Page-16, Monday, April 19, 2021

East Java Potentially Excess Gas Supply

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that East Java will have an excess gas supply of up to 200 million standard cubic feet per day / MMscfd in 2022-2025. This is after the completion of a number of gas projects in the region at the end of this year.

Blogger Agus Purnomo in SKK Migas

    Deputy of Finance and Monetization of SKK Migas, Arief S Handoko, said that at least three oil and gas projects in East Java will be completed by the end of this year, namely the Jambaran-Tiung Biru (JTB) Project, Sidayu and Bukit Tua Phase 2B owned by Petronas. 

Blogger Agus Purnomo in Petronas PC Ketapang II

    The three of them will increase the gas supply in East Java. With this potential gas supply, SKK Migas hopes that the gas user industry can optimize business deals fairly and stick to the provisions in the Minister of Energy and Mineral Resources Regulation Number 8 of 2020 and Minister of Energy and Mineral Resources Decree Number 89 of 2020 which regulates gas prices for certain industries.

"While gas prices from upstream are very economical, we hope that the government can encourage the growth of the gas user industry in East Java and Central Java so that this gas potential can be purchased so that it can drive the regional economy and create a bigger multiplier effect," said Arief.

    Referring to SKK Migas data, the additional supply from the JambaranTiung Biru, Sidayu, and Bukit Tua Phase 2B projects is estimated at 226.2 MMscfd. The Jambaran-Tiung Biru Field Unitization Project undertaken by PT Pertamina EP Cepu (PEPC) will produce gas up to 192 MMscfd. 

The Jambaran-Tiung Biru Field

    Meanwhile, the additional supply from the Sidayu Project is 4.2 MMscfd for gas and 7 thousand barrels per day (bpd) for oil, and Bukit Tua Phase 2B 30 MMscfd for gas and 12,500 bpd for oil.

"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.

    He explained that the Jambaran-Tiung Biru Project, which was included in the list of National Strategic Projects (PSN), was scheduled to start production last year. However, the Covid-19 pandemic last year caused delays in completing this project this year. Apart from the three projects, previously there was a West Pangkah Project operating.

"At the beginning of the year there was also the West Pangkah Petronas Project which increased gas supply from the Pangkah Block, so it can be said that the amount of gas supply in East Java for 2021 will be fulfilled," he explained.

    The West Pangkah project produced 23 MMscfd of gas and 2,200 bpd of oil. To increase the utilization of this gas supply, Arief continued, his party is also encouraging the completion of the Cirebon-Semarang pipeline in order to develop the gas market in Central Java. The reason is, currently, a Gresik-Semarang pipeline has been built that can carry gas from East Java to Central Java.

"In the future, we hope that the Cirebon-Semarang transmission pipeline can be built, so that with this gas pipeline, the excess gas supply in East Java will be channeled to support the fulfillment of gas needs for industries in Central Java," said Arief.

    In fact, referring to the Gas Balance, which was compiled in 2018, East Java is one of the areas projected to have a gas supply deficit. This projection refers to the second scenario in the balance sheet which estimates gas demand based on the previous year's consumption realization and economic growth targets. The gas deficit of 563.23 MMscfd in East Java-based on this scenario will occur in 2027.

Investor Daily, Page-10, Friday,  April 16, 2021

Ahok asks JTB to be on time

 

    The President Commissioner of PT Pertamina (Persero) Basuki Tjahaja Purnama paid a working visit to the Jambaran - Tiung Biru (JTB) gas unitization field development project operated by PT Pertamina EP Cepu (PEPC) in Bojonegoro.

PT Pertamina EP Cepu (PEPC)

    Arriving at the project location in Bandungrejo Village, Ngasem District, Bojonegoro, Ahok, as he is often called, he inspected several locations in the project. He hopes that the JTB Project activities can be on stream soon in November 2021.

"Overall the JTB Project is on the track. We hope to be on stream soon in November 2021. Especially for JTB Project workers, work safely and come home safely," said the man who is familiarly called Ahok.

Basuki Tjahaja Purnama AKA Ahok

    With the on stream target, it is hoped that the energy needs in the East Java region, especially from the gas sector, can be accommodated immediately. Pertamina is developing the JTB Project to meet national energy needs. The JTB project can support gas energy of 192 MMSCFD during the production period. 

The Jambaran Tiung Biru (JTB) project

    The JTB project will provide a multiplier effect in providing gas supplies to various industrial sectors in Central and East Java. In addition, in partnership with ExxonMobil Cepu Limited (EMCL), Pertamina is involved in a 45 percent share ownership in the Banyu Urip Oil Field.

ExxonMobil Cepu Limited (EMCL)

    Ahok went to JTB Field accompanied by CEO of Subholding Upstream Pertamina Budiman Parhusip, President Commissioner of PT Pertamina EP Cepu (PEPC) Gandhi Sriwidodo, as well as other Pertamina Management. The group arrived and was greeted by the President Director of PT Pertamina EP Cepu (PEPC), Awang Lazuardi, and his staff. 

the Banyu Urip Oil and Gas Field ExxonMobil

    In addition to the JTB Field, Ahok also visited the Banyu Urip Oil and Gas Field in the Cepu Block in Gayam District. Ahok appreciated the oil and gas operators who have helped the government in fulfilling oil and gas energy.

Republika, Page-9, Friday,  April 9, 2021

Instead of Manage Challenging Rokan Blocks

    The transfer of management of the Rokan Block from PT Chevron Pacific Indonesia to PT Pertamina (Persero) left a problem with the electricity supply. With crude oil production of 160,000 barrels per day, the Rokan Block requires an electricity supply of up to 400 megawatts and steam of 335,000 standard barrels per day. It is feared that the problem will affect oil production when the block in Riau was managed by Pertamina.

Blogger Agus Purnomo in SKK Migas

    According to Fatar Yani Abdurrahman, Deputy Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), the electricity supply in the Rokan Block is the backbone of the block's production operations. 

    So far, the supply of electricity and steam has been managed by PT Mandau Cipta Tenaga Nusantara (MCTN), which has a contract with Chevron. The company operates a Gas and Steam Power Plant (PLTGU) with a capacity of 300 MW.

"SKK Migas knows that the plant is being tendered and sold to the highest bidder. We have also discussed with Chevron that the most reliable electricity manager in Indonesia is only PT Perusahaan Listrik Negara (Persero). We'll just wait for the solution, "said Fatar in the webinar" Safeguarding State Assets and Sustainability of Electricity Supply in the Rokan Block ".

the Rokan Block by Chevron

    The PLTGU in the Rokan Block has become a polemic, regarding its status as a state asset or not a state asset, in a cooperation contract scheme based on cost recovery.

    John Simamora, Director of Strategic Planning and Business Development at PT Pertamina Hulu Energi (PHE), said that his party had agreed to hand over the electricity supply in the Rokan Block to PLN. 

PT Perusahaan Listrik Negara (Persero)

    However, if PLN is not ready to supply electricity until the limit of handing over management of the Rokan Block to Pertamina, another option is to extend the power supply contract with MCTN.

    Executive Vice President of Corporate Communications and PLN CSR Agung Murdifi, through an official statement, stated that PLN is very ready to meet the electricity needs of the Rokan Block. The Sumatra electricity system has a power reserve of 2,800 MW.

Kompas, Page-10, Friday,  April 9, 2021

PLN Is Judged as Most Eligible to Manage Electricity Supply in the Rokan Block

 

    After the expiration of the PT Chevron Pacific Indonesia (CPI) contract in early August 2021, the electricity supply business in Rokan Block, Riau Province, is deemed to be carried out by PT PLN (Persero), as the state-owned electricity company as well as the mandate holder of the Decree of the Minister of Energy and Mineral Resources Number 634 12/20 / 600.3 / 201.

PT Chevron Pacific Indonesia (CPI)

"According to Ministerial Decree No. 634, no business entity other than PLN has the right or authority to carry out electricity supply business activities in the Rokan Block," said PLN Commercial and Customer Service Director Bob Sariel, while speaking at a webinar entitled Safeguarding State Assets and Sustainability of Electricity Supply. in the Rokan Block organized by the Energy and Mining Editor Society (E2S).

PT PLN (Persero)

    According to Bob, the provision of electricity is very important in supporting the efficiency and adequacy of electricity nationally, every business entity wishing to participate in the electricity supply business should always be based on cooperation with PLN as a provider of electricity throughout Indonesia.

"For PLN, electrifying the Rokan Block is not about profit but about carrying out national duties," he said.

    The majority of the electricity supply in the Rokan Block comes from the Gas and Steam Power Plant (PLTGU) managed by PT Mandau Cipta Tenaga Nusantara (MCTN) whose majority shares are owned by Chevron Standard Ltd (CSL).

    Chevron's electricity and steam agreement with MCTN, whose majority shares are owned by CSL as a Chevron Holding group, is embodied in the form of an Energy Service Agreement (ESA) with a return on investment in the form of a Capacity Fee. The contract period starts from 2000 to August 8, 2021, where the revenue is estimated to have exceeded the return on investment so that the interests of shareholders have been fulfilled so far.

the Rokan Block Chevron

    Bob explained, after the end of the Rokan Block management contract by CPI, the ESA between CPI and MCTN also ended. CSL, as the majority shareholder of MCTN, should not conduct an open bid for the sale of MCTN shares using the services of JP Morgan's financial consultant. Because the management of the Rokan Block by CPI ends in August 2021.

    CSL as the majority shareholder of MCTN whose agreement with CPI also ends in August 2021 should communicate conducive to electricity and steam providers appointed by Pertamina in providing reliable and efficient electricity and steam for the long term along with the management of the Rokan Block which switches to Pertamina starting August 9, 2021.

PT Pertamina Hulu Rokan (PHR) Working Area

    Bob said PLN is ready to carry out an important mandate to support the management of the Rokan Block by PT Pertamina Hulu Rokan (PHR), a subsidiary of PT Pertamina Hulu Energi, to produce and produce as much as possible for the country. PLN is also ready to conduct business-to-business negotiations with Chevron regarding the power plant in the Rokan Block.

"B2B problem, yes we do, of course, this must be based on fairness. What is being offered must be something that is reasonable, "said Bob.

    According to him, PLN is capable of managing the CSL generator in Rokan. Moreover, PLN is accustomed to using any technology for generators.

"Like the PLTGU in Tanjung Priok and Muara Karang, the engine is the same as in the Rokan block," he said.

    Fataryani Abdurahman, Deputy Head of SKK Migas, said that SKK Migas has sent a letter to Chevron regarding the power plant in Rokan.

"We said that the profits have been many, for 20 years you PT Chevron Pacific Indonesia (CPI) have got a lot of benefits. But sometimes we forget that they also maintain, "he said.

    According to Fatar, electricity is the backbone of operations in the Rokan Block. Because the PLTGU was designed in the 90s to implement Steamflood Enhanced Oil Recovery (EOR) technology which requires a large electricity supply.

Investor Daily, Page-10, Friday,  April 9, 2021

Chevron Electric Tenders Too High

 

    PT PLN (Persero) asked Chevron to conduct an open tender for the Rokan Block electric generator, including by not setting an auction value of US $ 300 million because it was considered too high.

the Rokan Block

    Director of Commerce and Customer Management of PLN, Bob Saril, said that the business to business process related to the auction of the 300 megawatt (MW) power plant must be based on justice. According to him, the price set by Chevron is too high, so the pricing for the assets must be based on a fair assessment.

"The purchase value alone was US $ 190 million 20 years ago. We want to sell US $ 300 million, ”he said in the webinar on Safeguarding State Assets and the Sustainability of Electricity Supply in the Rokan Block.

the Rokan Block Working Area

    Bob also regretted that Chevron's move to hold the tender in the United States had prevented the process from being open. PLN is working with a number of related institutions to calculate the fair value of the asset which Chevron owns 95% of its shares.

“The tender process must be carried out fairly, but it seems that the tender process is not open. Intentionally covered up to find the highest value "he said.

    According to him, in the authority to supply electricity in the Rokan Block, PLN refers to the Minister of Energy and Mineral Resources Regulation No. 28 of 2021 and the Minister of Energy and Mineral Resources Regulation No. 30 of 2018. The Rokan Block area is part of the PLN electricity sales business area. For this reason, the supply of electricity and steam in the Rokan Block must be handed over to PLN as the party responsible for generating electricity. Other business entities can support PLN for other supporting services in carrying out these national duties.

PT PLN (Persero)

"For PLN, electrifying the Rokan Block is not about profit but by carrying out national duties," he said.

    On the other hand, PT Pertamina (Persero) will also prepare options if the acquisition process for Chevron's power plant in the Rokan Block cannot be completed during the transition period of management transfer.

    Pertamina's Upstream Subholding Director of Strategic Planning and Business Development John Simamora said that his party had partnered with PLN by signing a memorandum of understanding between the two parties to ensure the supply of electricity in the Rokan Block. 

    However, if the process of acquiring Chevron's power plant which is operated by PT Mandau Cipta Tenaga Nusantara has not been completed by the time of transfer of management on August 9, 2021, Pertamina must take steps so that the production process is not disrupted.

"We prioritize production, so the best step is if the latest PLN data cannot be taken over on August 9, we will of course mirror the contract until PLN succeeds in completing the process that is currently happening," he said.

    With regard to the selling price of electricity, John said that the tariff that PLN will apply will not be much different from the current price. In fact, it is possible that PLN's price will be more competitive.

"Because it could be that the actual costs so far shouldn't have been that much."

Blogger Agus Purnomo in SKK Migas

    Seeing the problems in the Rokan Block, Deputy Head of SKK Migas Fatar Yani Abdurahman said the main priority during the transfer of management of the block was to maintain production. 

    According to him, the acquisition process takes a long time because it could be a year to two years. For this reason, there are a number of options so that the demand for electricity and steam in the Rokan Block can be guaranteed during the operator shift period.

    Several viable options include mirroring contracts or forming a consortium with the old operator. Apart from that, the state could also ask for these assets to be transferred to PT Pertamina Hulu Rokan (PHR) or a regionally owned business entity.

    Furthermore, Fatar added that as of March 2021, out of the target of drilling 192 wells included in Chevron's investment, the realization had reached 28 wells. Meanwhile, for the workover activities of the target of 10 activities, 3 workovers have been realized. Reflecting on the process of transferring management of the Mahakam Block, SKK Migas prepares anticipatory steps to maintain production rates in the Rokan Block.

    In this regard, SKK Migas Operations Deputy Julius Wiratno said that his party would be quicker to start drilling activities so that they could reduce the rate of decline in production when the confusion shifted to PT Pertamina Hulu Rokan (PHR). Development drilling is also ongoing in addition to the use of Enhanced Oil Recovery (EOR).

Bisnis Indonesia, Page-3, Friday,  April 9, 2021