The oil and gas industry players began to review all work plans, in line with the weakening of world oil prices to levels below the US $ 30 per barrel, the lowest since 2016.
With conditions inevitably the upstream oil and gas sector must carry out various strategies, including efficiency measures in order to remain viable.
Deputy Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Fatar Yani Abdurrahman said that he continued to monitor developments in world oil prices, including proposals from the Cooperation Contract Contractors (KKKS). At present his party together with KKKS is still focused on existing production.
"We have prepared a policy, but we have not released it. What we see now is how the KKKS survive and profit and loss in the direct costs of production, "he said.
Based on Bloomberg data, at the beginning of this year, the price of West Texas Intermediate (WTI) oil reached US $ 61.18 per barrel until finally reaching the level of US $ 22.63 per barrel in trading Friday (20/3).
In line with that, Brent oil reached the level of US $ 66.25 per barrel at the start of 2020, until finally, it dropped to the level of US $ 26.98 per barrel in trading last week.
Meanwhile, on Thursday (March 26) until 14.32 WIB, WTI type oil prices for the May 2020 contract were exchanged Nymex is at the level of US $ 23.54 per barrel. Likewise with the price of Brent oil for the May 2020 contract on the ICE exchange corrected 0.83% to as low as the US $ 26.56 per barrel.
SKK Migas Deputy for Operations Julius Wiratno added, the weakening of world oil prices below the level of US $ 30 per barrel certainly had an effect on the performance of KKKS. For this reason, his party facilitated and tried to review massive efficiency measures, especially for KKKS that have high operating costs.
"We are discussing reviewing work programs that are not a priority so we immediately drop it," he explained.
Pertamina Hulu Energi's Managing Director Meidawati revealed that her office was reviewing all work plans and renegotiating the procurement of goods and services.
Not only that, but he also carried out efficiency related to operating cost budgets without disturbing costs associated with the health safety security environment (HSSE), costs that have a direct impact on production, as well as costs related to worker welfare.
"If oil prices are low, work plans can delay or cancel both exploration and development. What is clear is that we will prioritize the exploration and development drilling work plan whose risk is lower in the future, "said Meidawati.
For the production target, Pertamina Hulu Energi will continue to optimize its production activities so that this year's production target can be achieved despite the pressure.
"We will try our best. There are still 9 months to go, and we hope that all problems will end and the price of oil will return to the above US $ 50 per barrel, "said Meidawati.
POLICY PACKAGE
With the weakening of oil prices to below the level of US $ 30 per barrel, the government's policy package is certainly highly anticipated to support the sustainability of the upstream oil and gas sector. Executive Director of the Institute for Essential Services Reform (IESR) Fabby Tumiwa said, if the weakening of world oil prices occurs within the next 6 months, it is necessary to consider changing the formula for revenue sharing and other fiscal incentives.
According to him, this matter needs to be reviewed carefully by SKK Migas, the Ministry of Energy and Mineral Resources, and the Ministry of Finance.
"For the time being I have not recommended it, but for the study, it could be done pending the development of oil prices," he said.
Meanwhile for KKKS, Fabby argues, efficiency is the most appropriate strategy to be applied in the current conditions. The reason is that the average cost of oil production in Indonesia is the US $ 25 per barrel-US $ 30 barrels so that with the current oil price, KKKS can be said to be at a disadvantage because of the difficulty in getting profits.
"For KKKS in the current oil condition, it is necessary to carry out massive efficiency," he explained.
On the other hand, observers of the upstream oil and gas sector Tumbur Parlindungan assess the government's needs to make the ecosystem in the oil and gas sector more conducive and help facilitate all licensing. In addition, the government needs to hold activities that help KKKS to increase their production.
"In the end, there will be a merger or acquisition between oil and gas companies," he said.
Indonesian Petroleum Association Director Nanang Abdul Manaf said that if the weakening of oil prices is long-term in nature, it will later have an impact on all KKKS activities.
"Actually the price of oil below the US $ 30 per barrel has touched psychological numbers," he said.
According to Nanang, of course, incentives are needed because many projects are no longer economical with low oil prices.
Bisnis Indonesia, Page-8, Friday, March 27, 2020
No comments:
Post a Comment