Split Change as Incentive is the Last Option

    The government is still evaluating PT Pertamina (Persero)'s proposal regarding the addition of profit sharing (splits) in several terminated oil and gas blocks. This is because the addition of a split is the last option as one of the upstream business incentives. 

Arifin Tasrif

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif said that the addition of a split is not the only form of incentive for the upstream oil and gas business. His party assessed that several regulations regulate various forms of incentives to facilitate this upstream oil and gas business.

"We are currently conducting an evaluation," he said.

Dwi Soetjipto

    Dwi Soetjipto, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), expressed the same thing. His party is still discussing the proposed additional split between Pertamina and the Ministry of Energy and Mineral Resources. One of them is being studied other incentive options that can replace the addition of this split.

Agus Purnomo in SKK Migas

"We are looking for efforts so that the additional split is the last alternative. So now we are reviewing it, "he said.

    Deputy for Planning of SKK Migas, Jaffee Suardin, revealed that the proposed additional split was through long discussions with his party. The reason is that this proposal was initiated by his party's efforts to seek oil and gas potential that could be developed but had not yet been included in Pertamina's long-term plan. 

    Furthermore, his party issued a recommendation to the Ministry of Energy and Mineral Resources. According to him, this additional split has the potential to generate oil and gas reserves for Indonesia without having to wait for exploration activities to be carried out. Not only that, but this step will also increase the economy of the oil and gas block for up to 10 years.

"What is currently being discussed can add approximately 120 million barrels of oil reserves and 1.7 trillion cubic feet of gas," said Jaffee.

    He said the additional split proposal did not end only for Pertamina. His party will continue to look for oil and gas potentials in other working areas that can be developed in the future.

"The point is, the more aggressive and efficient," he added.

    According to Taufik Aditiyawarman, Director of Development and Production of PT Pertamina Hulu Energi (PHE), the additional split is proposed for the Mahakam Block and the Sanga-Sanga Block. 

    In addition, his party is still reviewing the proposed changes to the results of the East Kalimantan Block, Offshore North West Java (ONWJ), and Offshore Southeast Sumatra (OSES). The five blocks are termination blocks managed by the company. Taufik had said that if he obtained an improvement in the profit-sharing, his party was committed to increasing the production of the oil and gas block.

"Of course, with a better economy, it will maximize the monetization of the potential in the oil and gas block, increase reserves and future production," he said.

the Mahakam Block

    Pertamina signed the Production Sharing Contract / PSC) Sanga-Sanga Block, East Kalimantan, and the OSES Block with the Gross split scheme in 2018. Likewise, the amendment to the Mahakam Block PSC uses a cost recovery investment scheme. The ONWJ Block contract was signed in 2017. 

    Referring to the contract, Pertamina's profit-sharing in the Sanga-Sanga Block is set at 49% for oil and 54% for gas. Meanwhile, in the East Kalimantan-Attaka Block, the company gets 61 percent for oil and 66 percent for gas. Furthermore, Pertamina's profit-sharing in the OSES Block is set at 68.5% for oil and 73.5% for gas.

    In the ONWJ Block, Pertamina previously obtained additional splits through ministerial discretion and changes to the gross split scheme. Initially, Pertamina's profit-sharing in this block was 57.5% for oil and 62.5% for gas. At the end of 2017, this revenue-sharing amount increased to 73.5% for oil and 81% for gas.

Investor Daily, Page-10, Saturday, Nov 7, 2020

KPK Monitors Banyu Urip Oil

 

The process of resolving excess oil production from the Cepu Block Banyu Urip Field continues. The Corruption Eradication Commission (KPK), which was involved in the discussion, stated that there were three solutions to the problem of oil production in the Banyu Urip field that could not be bought. 

the Cepu Block Banyu Urip Field

    First, PT Pertamina can buy as much as possible the production of Banyu Urip Field. Second, if the production is to be sold, it is through an auction scheme. Third, if production is cut, there must be calculations on state revenue.

The Corruption Eradication Commission (KPK)

There are at least four institutions involved in discussing the excess production of the Banyu Urip Field. The four institutions are the Ministry of Energy and Mineral Resources (ESDM), SKK Migas, Ministry of Finance, and the KPK. This Anti-Corruption institution was asked to be involved so that there would be no problems and legal cases in the future. The KPK is still asking for additional data on the calculation of each option.

"The KPK asked for modeling for the three options presented," said KPK Prevention Deputy Pahala Nainggolan.

To Pahala Nainggolan's knowledge, the Banyu Urip oil that Pertamina did not buy because of its type, if processed, would produce diesel products whose demand was said to be decreasing, plus Pertamina's refinery capacity was almost full. When Pertamina did not buy, SKK Migas had also conducted the crude auction. 

Blogger Agus Purnomo in SKK Migas

    However, according to Pahala Nainggolan, the auction was not reached because the price was still below the Indonesian Crude Price (ICP). This is considered contrary to regulations, especially from the Directorate General of Budget, Ministry of Finance.

"So Banyu Urip's production is already full and faced with the burden of renting a container ship and the difficulty of getting the service of a vessel because of the competition," said Pahala Nainggolan.

Even the export option is also facing uneconomical price constraints. The last option, namely cutting production, is deemed inaccurate considering the possible impact on sub-contractors and oil and gas production targets as well as part of the government that will be cut. According to Pahala Nainggolan, the most likely option is that Pertamina is asked to buy Banyu Urip oil at the maximum possible volume, then the rest will be sold at a price below the ICP.

Export is not a problem

"The options taken are not the most profitable, but the ones that are the least detrimental to the state. Perhaps that is the best way, so that the options are taken, for example, sold under (ICP), have a basis," said Pahala Nainggolan.

Deputy Chairman of Commission VII of the Indonesian House of Representatives (DPR) Edy Soeparno hopes that there will be no production cuts.

"If there is excess crude, it can be exported. There are a market and a good price, then it is better to export it," explained Edy Soeparno.

Edy continued, the policy of exporting oil needs to be careful because it involves the government and the domestic market obligation (DMO). Upstream oil and gas practitioners, Tumbur Parlindungan assesses that exports are not a problem. With current conditions. Crude prices may be below the ICP. If it is sold, there is state revenue. Meanwhile, there is no state revenue for cutting production. " he said.

Kontan, Page-12, Tuesday, Nov 3, 2020

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

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

Bij Agarwal

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

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

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

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

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

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

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

Hilmi Panigoro

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

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

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

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

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

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

Dwi Soetjipto

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

Blogger Agus Purnomo in SKK Migas

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

Sakakemang Block

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

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

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

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

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

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

PT Pertamina EP

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

PT Pertamina Hulu Energi

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

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

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

Secure Energy Supply, Pertamina Continues Strategic Projects

 

PT Pertamina (Persero) ensures that investment in strategic projects carried out in all business lines will continue even during the Covid-19 pandemic. This is to secure the resilience and independence of national energy in the future. 

Fajriyah Usman

    Pertamina Vice President for Corporate Communication, Fajriyah Usman, said that despite the pressure from low oil prices, exchange rates and a decline in energy demand, Pertamina remains committed to carrying out its strategic projects.

"Primarily, projects that will have an impact on national oil and gas production and energy in the next few years," said Fajriyah Usman.

the Jambaran-Tiung Biru Project

In Upstream, the company is working on the Jambaran-Tiung Biru Project through its affiliate, PT Pertamina EP Cepu (PEPC). In this project, Pertamina has completed drilling two wells at Wellpad Jambaran Central and perforating wells without using a rig using the Smart Coiled Tubing Unit in Jambaran East.

"This project will produce an average of 192 MMscfd (million standard cubic feet per day) gas with a target of gas on stream in 2021," said Fajriyah.

In addition, the company is also working on the KLD Project through PT Pertamina Hulu Energi Offshore North West Java (PHE ONWJ). After the KLD-1 well drilling has been completed, the project is currently entering the KLD-3 well drilling stage. This project is targeted to increase reserves and production by December 2020.

In other business sectors, Pertamina also continues with refinery development and construction projects through PT Kilang Pertamina Internasional (KPI). One of them is the Balikpapan upgrade and capacity building project and the Lawe-Lawe Terminal, which is one of the company's largest projects worth US $ 6.5 billion. This project will increase refinery capacity, improve product quality, and reduce the cost of production of fuel oil (BBM).

"The Balikpapan Refinery project has reached 22.26% as of October 22, 2020, running with strict health protocols, in addition to supporting the economic recovery program because it absorbs more than 5,000 workers," She explained.

In addition, the company continues to improve the reliability of its fuel storage and distribution facilities. Pertamina is running a number of storage tank infrastructure projects at the BBM Terminal, LPG Terminal, and the DPPU, as well as carrying out maintenance on 280 vessels. 

    This year, Pertamina has budgeted an investment fund of US $ 7.8 billion. Most of this investment fund was allocated for the upstream oil and gas sector amounting to the US $ 3.7 billion. In addition, the investment budget for refinery projects is the US $ 1.9 billion, downstream infrastructure is the US $ 1.2 billion, gas sub-holding investment is the US $ 800 million, and others US $ 300 million.

Fajriyah added, his party also ensures that the work of these projects is in accordance with the provisions for using the Domestic Component Level (TKDN). This is to strengthen the national industry, create jobs, and reduce dependence on imported products so that they can move the wheels of the national economy. Until the first semester of this year, Pertamina's TKDN average reached 54%.

"As a state-owned oil and gas company, Pertamina continues to carry out business and projects according to the direction of the Government, in this case, the Ministry of BUMN and the Ministry of Energy and Mineral Resources striving for the future of energy as well as driving the national economy by optimizing the use of domestic resources, "explained Fajriyah.

Investor Daily, Page-10, Monday, Nov 2, 2020

Support 70% of National Oil Production, Pertamina Must Be More Aggressive

 

With the transfer of management of the Rokan Block next year, PT Pertamina (Persero) will control 70% of the total national oil production. For this reason, Pertamina must be more aggressive in developing its oil and gas blocks in order to keep national oil production from falling significantly. Referring to Pertamina's data, as of last August, the realization of oil production from domestic assets was recorded at 314 thousand barrels per day (BPD). 

the Rokan Block

When compared to the realization of national oil production in the same period of 706.9 thousand BPD, Pertamina's oil production portion is around 44.41%. With reference to the current Rokan Block oil production at 176,398 BPD, the company's oil production will increase to the level of 490 thousand BPD or about 70% of the national oil production of 706 thousand BPD.

Trisakti University Energy Observer Pri Agung Rakhmanto said, with the increasing number of national oil and gas blocks controlled, the number of operational activities that Pertamina is working on must be more massive. This needs to be done so that national oil production does not continue to decline.

"We have to allocate a lot of investment for the upstream business, both for exploration, development, EOR (enhanced oil recovery)," said Pri Agung.

This is because Pertamina's restructuring or company reorganization does not guarantee the improvement in the company's upstream operation performance. However, this restructuring should be used by Pertamina as an instrument to achieve corporate targets and maintain national oil production.

"In the context of maintaining national production, it means that it must be used as an instrument to facilitate the execution of more massive and aggressive upstream programs and investments," explained Pri Agung.

Dwi Soetjipto

Dwi Soetjipto, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), also expressed a similar sentiment. The establishment of an upstream sub-holding by Pertamina should be able to improve the company's performance, especially in increasing national oil and gas production.

Blogger Agus Purnomo in SKK Migas

"We hope Pertamina will conduct a very aggressive and massive exploration in the future because the potential is still large," he said.

Pertamina's contribution to national oil production can be seen from at least six of the company's oil and gas blocks which are still on the list of the 10 largest oil producers in Indonesia. Even some of them, such as assets under PT Pertamina EP and the Mahakam Block, are the cornerstone of national oil production. Not to mention the Rokan Block as the second-largest oil producer whose management will shift to Pertamina next year.

"So we can see how we really hope that Pertamina plays a better role in the future," said Dwi.

In maintaining national oil production, Pri Agung added, it is not unlawful for the government to provide incentives for Pertamina, such as improvements to production sharing (split), tax relief, investment credit, accelerated depreciation, and others. However, this incentive must be balanced with strict requirements, for example, the determination of targets for drilling exploration and development wells, implementing EOR, the amount of oil and gas production, and adding oil and gas reserves.

"Any incentives should be given to Pertamina, as long as they are comparable to performance achievements. So, incentives or rewards are conditional and based on the achievement of measurable performance targets, "he explained.

Investor Daily, Page-10, Monday, Nov 2, 2020

Strategic Project Investments are ongoing

 

PT Pertamina (Persero) ensures that strategic project investment in all of the company's business lines will continue during the pandemic. 

Fajriyah Usman

    VP of Corporate Communication of Pertamina, Fajriyah Usman, said that the company is committed to maintaining national energy production in the next few years.

"Even though we were hit by a triple shock during the pandemic and it caused obstacles in the field," said Fajriyah.

the Jambaran-Tiung Biru unitization field

She said several strategic projects in the upstream area, such as Jambaran-Tiung Biru managed by PT Pertamina EP Cepu (PEPC), are currently continuing and have successfully carried out rigless perforation with smart coiled tubing units.

This project will produce gas from the Jambaran-Tiung Biru unitization field with an average production of 192 MMscfd with a target gas on stream in 2021. In addition, activities off the north coast of West Java carried out by PHE ONWJ are continuing. After completing the KLD-1 well drilling, the KLD ONWJ development project is currently entering the KLD-3 well drilling stage.

This project is targeted to increase reserves and production by December 2020. In other business sectors, Pertamina continues the development of the PT Pertamina International Refinery. One of them is the Balikpapan and Lawe-lawe RDMP project, which is worth the US $ 6.5 billion. 

Nicke Widyawati

    Pertamina President Director Nicke Widyawati revealed the triple shock that Pertamina experienced during the pandemic.

First, a decrease in sales of 25% nationally. Second, the company's cash flow is affected by rupiah fluctuations. Nicke admitted that he had created a tough and very tough scenario to anticipate the effect of the exchange rate on the company's revenue. Third, the company's cash flow is affected by fluctuations in world oil prices. Currently, global crude oil prices are very volatile due to falling demand amid Covid-19.

Bisnis Indonesia, Page-5, Monday, Nov 2, 2020

SKK Migas targets the end of November

 

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) targets that drilling in the Rokan Block will begin next month. SKK Migas Operations Deputy Julius Wiratno said that currently, PT Chevron Pacific Indonesia (CPI) is still converting two units of rigs to be used for drilling.

Blogger Agus Purnomo in SKK Migas

In addition, CPI has procured several service jobs that support drilling activities. Julius said SKK Migas and CPI continued to make efforts so that the drilling activity could begin in November according to the agreement.

PT Chevron Pacific Indonesia (CPI)

"The target is the end of November," he said.

Sonita Purnomo

When confirmed, the CPI was still reluctant to explain the details of drilling preparations that will begin next month. CPI Corporate Communication Sonita Purnomo said that her agency continues to have intensive discussions with SKK Migas before starting the drilling.

"PT CPI continues to have intensive discussions with SKK Migas to finalize the detailed implementation of the heads of agreement to support the commencement of drilling activities," She said.

the Rokan block by Chevron

SKK Migas and CPI have agreed on ahead of agreement (HoA) on September 28, 2020, for investment in the transition period for the Rokan work area (WK). CPI will remain investing in 2020-2021. This investment is an effort to increase production in the Rokan block working area during the transition period before being transferred to the management of PT Pertamina (Persero) in August 2021.

Bisnis Indonesia, Page-5, Saturday, Oct 31, 2020

Drilling of the Rokan Block well has the potential to be delayed to December

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that the drilling of wells in the Rokan Block will be carried out in late November or early December. Currently, rig procurement is underway.

Blogger Agus Purnomo In SKK Migas

    Deputy for Operations of SKK Migas Julius Wiratno said that the government and PT Chevron Pacific Indonesia (CPI) had signed the main agreement for the implementation of operations during the transition period of the Rokan Block. Currently, Chevron is preparing a rig that will be used to drill this well, along with its supporting service contracts.

the Rokan Block

"At the end of November or early December, drilling will be carried out in the Rokan Block," he said.

PT Chevron Pacific Indonesia (CPI)

    According to Julus Wiratno, the rigs that are currently available are rigs that are usually used to workover wells. As a result, Chevron needed time to convert the rig to be used for infill well drilling. However, as planned, 11 wells will be drilled in 2020.

"After that in 2021, about 6 rigs will be added to carry out drilling. After that, PT Pertamina (Persero) will continue in August 2021, "added Julius.

Dwi Soetjipto

    Head of SKK Migas Dwi Soetjipto explained that the total investment for drilling wells in the Rokan Block in 2020-2021 is around the US $ 154 million. In detail, Chevron will drill 11 wells in 2020 and 107 wells in 2021. This year, the annual average additional oil production from this drilling is only 500 barrels per day (BPD).

"But in 2021, additional production will reach an average of 5 thousand bpd," he said.

    He emphasized that his party is focused on overseeing the implementation of the transfer of management of the Rokan Block from Chevron Indonesia to Pertamina as well as possible. One of them is the process of procuring goods and services, in which out of the 19 procurement packages needed, 10 packages have been contracted.

"SKK Migas will conduct supervision," said Dwi.

    Regarding Pertamina's potential partners in managing the Rokan Block after August 8, 2021, Dwi did not answer because it was Pertamina's authority. However, until now, he admitted that he had not received a report from Pertamina regarding his potential partner.

"We focus on securing the stage when Pertamina enters, with a better level from the production side," he said.

Arifin Tasrif 

    Previously, Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif reminded Chevron and SKK Migas to realize the provisions agreed upon in the HoA. This is because the implementation of this provision will have an impact on efforts to achieve the national oil and gas production target next year according to the 2021 APBN macro agreement.

"We will continue to monitor its implementation periodically to ensure the commitment of all parties goes according to the agreement, especially the certainty of the implementation of drilling activities which will start in November 2020," said Arifin.

    This year, the Rokan Block is targeted to produce 170,000 bpd of oil. Until the end of last June, the realization of this block's oil production was recorded to have exceeded the target, reaching 176,298 bpd. However, this realization fell when compared to production in 2019 which reached 190,131 thousand bpd. The Rokan Block is the second-largest oil producer in Indonesia.

Investor Daily, Page-10, Friday, Oct 30, 2020

Pertamina is considering PLN's electricity offer for the Rokan Block

    PT Pertamina (Persero) is building communication with various parties for the operational preparation of the Rokan block working area, including the provision of electricity and steam which are indispensable in supporting the continuity of oil production activities. One of them is the State Electricity Company (PLN).

the State Electricity Company (PLN)

    Pertamina SVP Corporate Communication & Investor Relations Agus Suprijanto said that oil production currently reaches 170,000 barrels of oil per day (around 25% of national oil production). He revealed that PLN had submitted an initial offer to Pertamina regarding the provision of electricity and steam.

"Pertamina welcomes PLN's desire to provide electricity and steam supply for the Rokan block working area starting August 9, 2021. By cooperating with BUMN in the electricity sector, we hope that the preparation of post-management transfer of electricity and steam supply will remain safe. PLN together with PHR will conduct intensive discussions regarding this matter in the near future, "said Agus.

the Rokan Block Work Area By Chevron

    Currently, the Rokan Block Work Area receives electricity and steam supply from an integrated power system which includes 3 main power generation facilities, namely Minas Gas Turbine, Central Duri Gas, and North Duri Cogen (NDC). 

    Regarding PLN's offer to provide electricity and steam in the Rokan block Work Area, Agus said that currently Pertamina has submitted a response and is waiting for a further proposal from the power company and hopes that the discussion of the Electricity and Steam Sale and Purchase Agreement with PLN will go well and signed in November 2020.

"Synergy among energy SOEs do not only increase portfolios that mutually reinforce operational performance in each business sector, but also hopefully encourage the government's strategic development projects to run well according to the expected target," said Agus.

Investor Daily, Page-10, Friday, Oct 30, 2020

As of September, the National Oil Lifting Exceeds the Target

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) noted that the realization of ready-to-sell oil production (lifting) until last September reached 706 thousand barrels per day (BPD) or exceeded the Revised State Budget target of 705 thousand BPD. 

Blogger Agus Purnomo in SKK Migas

    Until the end of the year, SKK Migas is optimistic that it will be able to keep oil lifting from falling below the target.

Dwi Soetjipto

Head of SKK Migas Dwi Soetjipto said that the realization of national oil and gas lifting until the end of last September was very good, namely, 1.68 million barrels of oil equivalent per day / BOEPD or 99.6% compared to the APBN target of 1.69 million BOEPD. This achievement was supported by oil lifting which exceeded the target even though gas lifting was still under pressure from the decline in gas demand due to the Covid-19 pandemic.

"Oil lifting reaches 706 thousand BPD or 100.17% of the APBN-P. Meanwhile, gas is 5.502 million standard cubic feet per day / MMScfd or 99.03% of the target of 5,506 MMScfd, "he said.

As a result of the Covid-19 pandemic, he admitted, the implementation of oil and gas operations was not as expected. As of September, the realization of new development wells was 188 wells or only 48 percent compared to the target of 395 wells. By the end of the year, the number of development wells drilled is estimated to be only 252 wells, lower than the realization in 2019 of 322 wells.

Meanwhile, the realization of the workover activities was very good. As of September, the realization of workover activities was recorded at 444 wells or 53% of the target of 837 wells and is projected to reach 603 wells by the end of the year. Likewise with well maintained, which realized 18,746 activities or 67% of the target of 28,151 activities and is projected to reach 25,184 activities by the end of the year.

"Workover and well service are still very good because they involve current oil and gas production," Dwi explained.

He added that the main impact of the pandemic on exploration activities. As of September, his party noted that the realization of 3D seismic activities only reached 918 square kilometers (km2) or 27% of the target of 3,421 km2 and the realization of exploration wells was only 19 wells or 51% of the target of 37 wells. Only 2D seismic activities were very good, namely, 26,929 km realized from the target of 28,324 km.

Dwi admitted efforts to optimize oil and condensate production was not easy. From the start of the proposed cooperation contract (KKKS) for this year's oil production of 673 thousand BPD, his party managed to secure a commitment at the level of 707.2 thousand BPD.

However, due to the impact of the Covid-19 pandemic, there was a decline in the production of 32 thousand BPD so that oil production remained at 704 thousand BPD. His party then sought an additional 2.9 thousand BPD. Furthermore, for gas, his party managed to obtain additional production from the absorption optimization of 70 MMScfd. 

    Additional absorption comes from the East Kalimantan System of 21 MMScfd, West Natuna Transportation System (WNTS) 17 MMscfd, Grissik-Singapore 29 MMscfd, and Medco Malaka 3 MMscfd. So that, until the end of the year, his party is still projecting oil and gas lifting on target.

"The outlook until the end of the year with various problems remains 705 thousand BPD for oil and 5,502 MMScfd for gas," Dwi said.

Maintain Investment

Dwi continued, globally, the Covid-19 pandemic and the fall in crude oil prices had an impact on reducing investment by oil and gas companies. Until the end of September, his side recorded that the realization of upstream oil and gas investment was US $ 6.9 billion, or only 50 percent of the US $ 13.8 billion targets. However, at the end of the year, he is optimistic that upstream oil and gas investment could reach the US $ 11.1 billion or 80.44% of the target.

Investor Daily, Page-10, Monday, Oct 26, 2020