Pertamina is looking for new partners in the Cilacap Refinery Project

PT Pertamina (Persero) is looking for new partners to develop the Cilacap Refinery upgrading and capacity building project. This is after the project economics agreement was not reached with Saudi Aramco, which has had cooperation with Pertamina since 2016.

Fajriyah Usman

     Pertamina Corporate Communication Vice President Fajriyah Usman said Pertamina did not become a partner with Saudi Aramco in building the Cilacap Refinery Project because there was no agreement. Therefore, for the time being, he will work on this project independently while exploring other strategic partners.

"The assessment of [new strategic partners] is underway. However, we cannot convey [the candidates], "said Fajriyah Usman.

Fajriyah Usman explained, Pertamina and Saudi Aramco did not agree on the economic price of the Cilacap Refinery Project. Pertamina offers a rental scheme for the project, the same as the scheme used by the company in Balikpapan Refinery. Under this scheme, Pertamina will pay the rental fees for the joint venture with Saudi Aramco which is building a new refinery unit at the Cilacap Refinery Complex.

"Not agreeing about economic prices which may make calculations not right at this time, when oil and gas conditions are down," Fajriyah explained.

Previously, with the initial scheme, Pertamina and Saudi Aramco also did not immediately reach an agreement related to the valuation of the Cilacap Refinery which caused the project to be delayed.

Nicke Widyawati

Pertamina President Director Nicke Widyawati briefly explained, the difference between the valuations calculated by Pertamina and Saudi Aramco is still very large. The Saudi Aramco count is very low, while Pertamina has a book value as a minimum limit to spin off assets.

Pertamina appointed Saudi Aramco as a partner in 2014. After two years, both of them signed a joint venture development agreement (JVDA) agreement in December 2016. This agreement became the basis for both of them forming a joint venture that will work on the Cilacap Refinery Project.

This JVDA should end in December 2018 but then be extended by six months until June 2019. Then the JVDA will be extended to September, then extended for the third time until October, and lastly extended until December 2019. This agreement is then extended until the first quarter of 2020 but again extended until the end of April.

The Cilacap refinery is targeted to start operating in 2025. After upgrading, the crude oil processing capacity of the Cilacap Refinery will increase from 348 thousand barrels per day (BPD) to 370 thousand BPD. Furthermore, there will be additional production of gasoline (gasoline) 80 thousand BPD, diesel 60 thousand BPD, and aviation fuel of 40 thousand BPD. Fuel production increased significantly because the ability of refineries to process crude oil into finished products (NCI) rose from 74% to 92-98%.

On Target

Meanwhile, Pertamina said that the construction of the Balikpapan Refinery Project has now reached 16.32%, ahead of the last quarter of this year which recorded 15.02%. The details, until May 17, engineering activities have reached 6.05%, procurement 5.85%, construction 4.38%, and commissioning 0.03%.

"The development of this project is still in accordance with the plan, although in the process it must implement strict health protocols," said Fajriyah.

The Balikpapan Refinery Project will increase refinery processing capacity from 260 thousand BPD to 360 thousand BPD and improve the quality of fuel products from Euro II equivalent to Euro V. The Balikpapan Refinery Project is also synergized with the construction of the New Crude Lawe-Lawe Tankage Facility with a storage capacity of 2 million barrel.

Fajriyah asserted Pertamina remained committed to completing all national strategic projects including the Cilacap and Balikpapan Refinery Projects. Pertamina will maximize and optimize the completion of the refinery development master plan (RDMP) and construction of a new refinery (grass root refinery / GRR) so that it can be completed according to the specified time target.

"The RDMP and GRR megaprojects are national strategic projects that have been set to continue during the co-19 pandemic and fluctuations in crude oil prices and the rupiah exchange rate against the dollar. This project is important to ensure that national energy security and independence can be realized immediately, "said Fajriyah.

The entire refinery project is targeted to be completed in 2026. He added, if the project is completed, the refinery's total capacity, which at the moment of 1 million barrels per day (BPD), will increase to 2 million BPD so that fuel needs can be met without the need for imports.

"Hopefully, in 2026, we will be independent by no longer importing BBM," said Fajriyah Usman.

Investor Daily, Page-9, Saturday, May 30, 2020

The Jambi Merang PHE 2D Seismic Survey Is Targeted To Be Completed Mid-July

2D seismic sea survey in open areas carried out by Jambi Merang Cooperation Contract (KKKS) of Pertamina Merang since November 2019 has reached 76.4% or around 22,943 Km.

"We are grateful to the Government for giving us the trust to carry out this work mandate, although full of challenges we are optimistic that survey work will be completed by mid-July 2020," said Pertamina Upstream Director Dharmawan H Samsu while carrying out the Management Walkthrough (MWT) virtual with the Head of the Special Task Force for Upstream Oil and Gas Activities (SKK Migas) on the ELSA Regent Ship which is currently in eastern Indonesian waters on Tuesday (26/5).

This 2D seismic survey is one part of the Jambi Merang PHE KKKS Definite Work Commitment which was carried out until 2024 with an investment of US $ 239.3 million. This 2D seismic survey area consists of 47 basins stretching from Bangka waters in western Indonesia to Papua waters in eastern Indonesia.

The length of the track is around 30,000 Km which is the largest seismic survey activity in the Asia Pacific and Australia in the last 10 years. SKK Migas Head Dwi Soetjipto said this 2D seismic survey was carried out 100% by Indonesia's best sons and daughters using the latest technology with parameters designed to accommodate the deepest exploration targets in the history of seismic surveys in Indonesia.

"The quality of results and accuracy in completing work will be important for this survey, which is expected to be able to create new work areas that can improve the upstream oil and gas exploration or investment climate in Indonesia going forward," he said.

Dwi is optimistic that the results of this survey will provide a giant discovery for Indonesia, which will make the Indonesian oil and gas industry enter the second golden era that can produce 1 million barrels of oil per day in 2030.

"SKK Migas gives the highest appreciation to Pertamina and Elnusa as the implementers of seismic work who continue to be committed to carrying out the work even though in the condition of the Covid-19 pandemic, we will be there and always support the efforts of all parties involved," he said.

Investor Daily, Page-9, Saturday, May 30, 2020

Pertamina Refinery Project Continues

Pertamina built a national strategic project at the time of the Covid-19 pandemic, the Investment Coordinating Board (BKPM) said the development of land acquisition for the oil refinery and petrochemical complex in Tuban, East Java, had reached 92 percent of the total 841 hectares.

The progress of neglected investment settlement is good news during the Covid-19 pandemic in Indonesia. The investment project in Tuban is included in the list of Rp. 708 trillion in neglected investment recorded by BKPM. Since the collaboration between PT Pertamina (Persero) and Rosneft was formed in 2017, development projects have been delayed for a long time, one of which is due to land acquisition constraints.

The value of the abandoned project is very large, amounting to Rp 211.9 trillion. The Tuban oil refinery project is owned by PT Pertamina Rosneft Processing and Petrochemical, which is a joint venture between Pertamina at 55 percent and Rosneft PJSC (Russia) at 45 percent.

This project is part of the New Grass Root Refinery (NGRR) that Pertamina built to meet domestic energy needs and produce high-quality petrochemicals.

The construction of oil refineries has been included in priority infrastructure projects since President Jokowi's first cabinet in the form of new refineries (NGRR) and the development of existing refineries (refinery development master projects / RDMP). However, various obstacles confront, such as land acquisition, licensing, until the completion of the contract.

Joko Widodo

President of the Republic of Indonesia Joko Widodo in a limited meeting on April 18, 2019, even gave strict directions to facilitate investors in the petrochemical sector to be given tax holiday investment incentives.

This indicates the government's seriousness in realizing the dream of building its own oil refinery. BKPM Sectoral Promotion Director Imam Soejoedi said that BKPM responded to this matter very seriously. BKPM has taken steps to resolve the issue of land acquisition in Tuban District intensively since last year and the licenses that have hampered the project have been neglected.

There are still a few small homework related to several permits namely environmental permits and are currently in the process of accelerating cooperation with the Ministry of Environment and Forestry (KLHK).

"Completion of this project is the government's priority to build downstream industries in the country so that Indonesia can reduce the deficit in the import balance, dependence on oil imports, and can build national industry resilience," Imam said.

The Head of BKPM forms a special team within BKPM to accelerate problem-solving in Tuban. In early February 2020, the head of BKPM visited the project site to complete negotiations with the surrounding community. This was done because this project would have a direct positive impact, including requiring up to 20 thousand workers at the time of construction and 2,500 workers in the operational phase.

Pertamina's Director of Processing and Petrochemicals (MP2) Ignatius Tallulembang stated that the Tuban GRR is one of the priority projects to be completed immediately. Pertamina and Rosneft have even signed a Tuban Refinery design contract with selected contractors last October 2019.

At present, Basic Engineering Design (BED) and Front End Engineering Design (FEED) are ongoing. The construction of the Refinery Development Masterplan Program or Balikpapan RDMP also continues.

Fajriyah Usman

At present, the progress has reached 16.32 percent, up from the first quarter of 2020 recorded 15.02 percent. Pertamina Corporate Communication Vice President Fajriyah Usman stated that the progress of the Balikpapan RDMP is currently on track, even though in the implementation process it must implement strict health protocols.

"The RDMP and GRR megaprojects are national strategic projects that have been set to continue to be built during the Covid-19 pandemic and fluctuations in crude oil prices and the rupiah exchange rate against the dollar. This project is important to ensure that national energy security and independence can be realized immediately, "said Fajriyah.

Fajriyah added, the progress of Balikpapan RDMP as of May 17, 2020, included four jobs, namely engineering (6.05 percent), procurement (5.85 percent), construction (4.38 percent), and commissioning (0.03 percent) so overall reached 16.32 percent.

Republika, Page-5, Friday, May 29, 2020

Pertamina-Rosneft Refinery Land Acquisition Reaches 92%

The Investment Coordinating Board (BKPM) stated that land acquisition for the oil refinery and petrochemical complex in Tuban, East Java has reached 92% of the total 841 hectares (ha). The investment project in Tuban is included in the list of Rp. 708 Trillion investment neglected.

Since the cooperation between Pertamina and Rosneft was formed in 2017, the development project has been delayed for a long time due to land acquisition. The abandoned project value reaches Rp. 211.9 trillion.

The Tuban Oil Refinery project is owned by PT Pertamina - Rosneft Processing and Petrochemical, which is a joint venture between Pertamina (55%) and Rosneft PJSC (Russia) (45%).

This project is part of the New Grass Root Refinery (NGRR) built by Pertamina to meet domestic energy needs and produce high-quality petrochemicals.

Director of Sectoral Promotion of the Investment Coordinating Board (BKPM) Imam Soejoedi said, his side has taken steps to resolve the issue of land acquisition in Tuban Regency intensively since 2019. 

    In addition, he said there was still some homework related to licensing, namely environmental permits, which are now being carried out the acceleration of cooperation with the Ministry of Environment and Forestry (KLHK).

Investor Daily, Page-21, Friday, May 29, 2020

Pertamina-Aramco Premature Partnership

After there was no certainty for almost 6 years, the collaboration between PT Pertamina (Persero) and Saudi Aramco Oil Co. the Cilacap Refinery development project can no longer be maintained.

Efforts to merge the strengths of the two state-owned oil and gas companies withered before they flourished. The decision to separate was disclosed by Pertamina through VP Corporate Communication Fajriyah Usman who stated the cooperation between Pertamina and Aramco in the project was no longer extended.

Fajriyah Usman

"After the extension of cooperation with Saudi Aramco was not carried out, Pertamina continued the Cilacap Refinery Development Master Plan (RDMP) independently, but in parallel, there would still be another strategic partner search," She said.

Nicke Widyawati

No immediate agreement was reached on the cooperation scheme until the valuation of the Cilacap Refinery was the main cause. Last February, Pertamina President Director Nicke Widyawati asserted that his party would still be waiting for offers from Aramco until the end of the first quarter / 2020 or March 2020.

Premature Partnership

It all started in 2014 ago. Pertamina began selecting partners in the Cilacap RDMP by submitting initial estimates of a number of aspects to the project such as capital expenditure of US $ 3 billion to the US $ 3.5 billion and an internal rate of return (IRR) of 15%. Through the development of the RDMP project, refinery processing capacity will increase from 348,000 barrels per day (BPD) to 370,000 BPD.

In addition, there will also be an increase in gasoline (gasoline) production from 59,000 BPD to 138,000 BPD and diesel dad production of 82,000 BPD to 137,000 BPD. With a current capacity of 348,000 BPD or 33% of the capacity of the oil refinery operated by Pertamina, the Cilacap Refinery is the largest refinery in Indonesia. The first phase of the Cilacap refinery has been operating since 1976 with a capacity of 118,000 BPD, while the Cilacap II refinery has operated since 1983 with a capacity of 230,000 BPD.

The resulting products are in the form of fuel oil (BBM) such as gasoline with octane RON 88 (Premium) and Ron 92 (Pertamax), kerosene, Solar, to avtur. Besides fuel, the Cilacap refinery also produces LPG, asphalt, sulfur, and petrochemical products such as benzene and propylene. The project is targeted to be completed in 2025 in order to pursue national energy security and independence which is marked by the stop of importing BBM in 2026.

The start of the partnership was marked by the election of Aramco as a partner with the signing of the MoU in December 2014 followed by The signing of the head of agreement (HOA) in 2015. In 2016, Aramco and Pertamina agreed on a number of key business principles through a joint venture development agreement (JVDA) with the majority portion being owned by Pertamina at 55% and the rest owned by Aramco.

One year ago, in 2017 both completed basic engineering designs with a refinery capacity of 400,000 BPD and an estimated capital expenditure of US $ 5.8 billion. After that, the collaborative process began to face a number of challenges. In 2018, Aramco requested that the Government of Indonesia obtain fiscal incentive facilities, including tax holidays.

Medio 2018, Pertamina has reached the progress of completing three Aramco requests, namely the granting of a tax holiday for 20 years, land acquisition, and approval of the Cilacap Refinery Business Unit (RU) IV spinoff along with the valuation results of the business unit. Regarding valuation, Pertamina has appointed Price Waterhouse Coopers (PWC) as an independent consultant to calculate the results that have been submitted to Aramco, namely an equity value of the US $ 3.98 billion, equivalent to US $ 5.18 enterprise value.

On November 19, 2018, at a high-level meeting in Jakarta, Aramco said that it would review the results of the RDMP valuation IV Cilacap and immediately deliver the results to Pertamina. Signs of the end of the Pertamina-Aramco partnership began to appear as the project valuation was not immediately agreed upon.

Time continued to roll and the signal to search for new partners was given by SOE Minister Erick Thohir on 29 October 2019, after attending the meeting coordination with the Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan. On the other hand, Pertamina actually shows its desire to partner with Aramco. Other collaboration alternatives were also proposed to Aramco, namely the only cooperated asset was the project new ones, and existing refineries are not included.

However, the offer did not seem to meet an agreement. The Pertamina-Aramco story at the Cilacap refinery in Central Java still ends prematurely. Meanwhile, Special Staff of the Ministry of SOEs Arya Sinulingga said that Aramco's withdrawal from its partnership with Pertamina in the Cilacap RDMP project was not due to the failure of negotiations on the business scheme to be carried out.

"Because corona and oil prices are falling, so the price to the economy does not enter again," he said.

He revealed that Pertamina was currently exploring potential new partners for the project. Arya said the potential partners are oil and gas companies from abroad.

NEED PARTNER

Gadjah Mada University Energy Economics Observer Fahmy Radhi said, reflecting on the negotiation process that took place too long and does not immediately produce a solution to terminate the cooperation is appropriate. Fahmy rate, Pertamina's financial capacity is able to finance the development of the project with a number of options, both absorbing internal funds, as well as from external sources such as the issuance of debt securities. Meanwhile, in terms of technology, Pertamina is also considered capable of continuing the development of the project independently.

"If the Cilacap RDMP project is completed and operational, then Pertamina will find a partner by releasing a maximum of 49% share ownership," he said.

Meanwhile, Executive Director of the Institute for Essential Services Reform (IESR) Fabby Tumiwa believes that Pertamina will find it difficult to develop the Cilacap refinery without cooperating with strategic partners. According to Fabby, of Pertamina's total capital expenditure this year of around the US $ 7.8 billion, half is allocated for business activities upstream, while the portion for refinery construction is not large.

"The investment capability is not enough to finance large projects such as refineries which, despite multi-years financing, will require very large CAPEX," he said.

Likewise, Executive Director of the RefoMiner Institute Komaidi Notonegoro said, business partners were needed by Pertamina to mitigate existing business risks. This is because Pertamina cannot focus its capital expenditure on refinery construction, but needs to be allocated to other business portfolios.

"Generally cooperation is needed because the business strategy is to minimize risk," he said.

The end of the collaboration between Pertamina and Aramco indeed raises big questions regarding the success of the Cilacap RDMP project. A big challenge awaits Pertamina to complete the project, either independently or with other partners.

Bisnis Indonesia, Page-10, Thursday, May 28, 2020

To Increase Petrochemical Business, Pertamina Continues to Build Refineries

PT Pertamina (Persero) will continue to develop six of its refinery projects even though sales of fuel oil (BBM) at the time of the Covid-19 pandemic was down dramatically. Because the construction of the refinery will increase the petrochemical business which will be the backbone of the company in the future.

Nicke Widyawati 

Pertamina President Director Nicke Widyawati said, although fuel sales were down, the refinery construction was still promising to continue. One of them, the construction of refineries is needed to encourage national energy independence considering the current fuel imports still reach 40% of the total national needs.

In addition, by equipping the refinery with petrochemical facilities, the refinery project will sustain the company's business in the future. The reason is, when fossil energy needs to decrease, the petrochemical business is considered to be very good. For example, during a pandemic, the pharmaceutical business actually increased and petrochemical facilities could provide basic chemicals for this industry.

"Petrochemicals will become one of Pertamina's business pillars, so we will strengthen it," said Nicke Widyawati.

Nicke acknowledged that the refinery project could not be carried out aggressively during the Covid-19 pandemic given the limitations of mobilization. He said he would focus on completing the design and administrative affairs of the refinery project during this pandemic. Thus, construction can be accelerated after the pandemic is over.

"So it can be continued immediately after PSBB (large-scale social restrictions) ends, can immediately open up employment opportunities," he said.

For example, the construction of the Tuban Refinery in Gresik which is being implemented by the PSBB. He explained, the process of preparing the construction site had to be stopped temporarily. However, it continues to complete its administrative work.

"But as soon as [PSBB] opened, it immediately started operating. Our intention of the refinery continues to create jobs for the people there, "said Nicke.

Until the end of the first quarter, the progress of land clearing in Tuban refinery has reached 90.08% and restoration of 46.4%. The general design progress (GED) of this project still reached 6.22%.

At present, the implementation of the basic engineering design / BED and front end engineering design / FEED of the refinery project has also begun. For projects that have entered the construction phase such as the Balikpapan Refinery Project, he continues to work on.

"The Balikpapan refinery is still ongoing, but the HSSE is tighter so there is no Covid-19 deployment)," Nicke said.

Balikpapan refinery construction until the end of March reached 15.02% and is targeted to reach 40% until the end of the year.

"The Cilacap Refinery and Balongan Refinery projects also continue," Nicke added.

Pertamina targets the development of the Balongan and Cilacap Refineries to reach 10% each this year and will continue to accelerate according to the target stages of development. Discussions with Saudi Aramco as the company's partner in building the Cilacap Refinery continue. 

    As for the Balongan Refinery, the company has signed a memorandum of understanding (MoU) with the Abu Dhabi National Oil Company (ADNOC) for the potential development of the Petrochemical Integrated Refinery Complex which is the third phase of the Balongan Refinery Project. Currently a feasibility study is being conducted with partners and is in the location and land acquisition.

For the first phase, the Balongan Refinery Project is still in the Dual FEED Competition (DFC) phase which is targeted to be completed this May. Next for the second phase, a feasibility study is currently being carried out as well as starting the Revamp Study Unit of the ARDHM.

Furthermore, the Plaju Refinery Project has now entered into the BED Licensor procurement and is starting the BED work. While the Dumai Refinery Project is in the stage of conducting a Bankable Feasibility Study (BFS) revisit tender.

Regarding the Bontang Refinery Project, the company had considered moving the location and is still under review. The company also continues to build new olefin production facilities at the PT Trans Pacific Petrochemical Indotama (TPPI) refinery where the company is a shareholder.

     If all refinery projects are completed, Pertamina's crude oil processing capacity will increase to 2.15 million barrels per day (BPD) from 1 million BPD. Not only that, Pertamina's refineries can also process oil with sulfur content up to 2%. Then, the company's petrochemical production will increase to 12,000 kilo tons per year (kilotonnes per annum / KTPA) from 1,660 KTPA. While the company's fuel production will increase to 1.7 million BPD from 600 thousand BPD.

Investor Daily, Page-9, Thursday, May 14, 2020

The government is advised to invite oil and gas junior companies

The government is advised to invite junior companies (small companies) that focus on oil and gas exploration activities. This is because the discovery of significant oil and gas reserves is the key to achieving the target of producing 1 million barrels of oil per day (BPD) by 2030. 

       Practitioners of Oil and Gas Tumbur Parlindungan revealed that large oil and gas companies rarely voluntarily disburse large funds for large-scale exploration activities. This can be seen from the lack of large oil and gas companies participating in the management of new oil and gas blocks through auctions held by the government.

For this reason, he advised the government to invite junior companies to look for potential oil and gas reserves in the country. This is because, in the world, junior companies usually focus on finding oil and gas reserves to be sold to large oil and gas companies. He gave an example, the discovery of large gas at Tangguh was actually carried out by Arco. However, BP, which is now the operator there, acquired the company.

"We need to invite small companies but want to take exploration risks. We need pioneers who want to drill, we need players who want to play exploration, big companies focus above 100 million barrels and above, "said Tumbur.

According to him, data on oil and gas reserves owned by Indonesia are currently difficult to compete with other regions. At present, large oil and gas companies are actually targeting Africa, which has proven oil and gas reserves in large quantities. This will only happen in Indonesia if there are 11 proven huge oil and gas reserves.

"The company will come if the reserves are proven large," said Tumbur.

Tumbur explained, large companies such as Shell, Chevron, Exxon, and Total would not be interested in oil and gas reserves whose volumes were less than 100 million barrels of oil equivalent. 

Furthermore, companies such as HESS, ConocoPhillips, and National Oil Company (NOC) such as Petronas, PTTEP Thailand, Repsol, will only glance at one area if the reserves are more than 50 million barrels of oil equivalent. 

In fact, he continued, the flow of foreign investment funds is very important so that exploration activities can run massively in Indonesia.

Blogger Agus Purnomo in Petronas PC Ketapang

"We see that our oil and gas block auction is not very large, so it will not be in demand by large companies," he said.

Repsol

On the other hand, the success of finding oil and gas reserves (success ratio) in Indonesia is still less than 50%. This could also be an obstacle to achieving the 1 million BPD oil production target. He gave an example, the findings of oil and gas in Ande-Ande Lumut could be one of the big findings, but the problem of monetization and the use of technology could hamper its development.

Referring to the data of the Ministry of Energy and Mineral Resources (ESDM), the number of the signing of production sharing contracts (PSCs) from oil and gas block auction results has been relatively low since 2015. In 2015, the government signed 8 PSCs. But afterward, although the auction was still held, in 2016-2017, not a single PSC was signed. Furthermore, as many as 11 PSCs were signed in 2018 and 6 PSCs last year. In fact, the signing of the PSC in Indonesia touched 26 contracts in 2011.

Inline, the realization of national oil and gas exploration investment has also been relatively low since 2015. In 2015, the realization of exploration investment was recorded to still reach the US $ 970 million. However, this exploration investment continues to decline to the US $ 916.2 million in 2016, US $ 576.55 million in 2017, and rose to the US $ 786.18 million in 2018. In fact, exploration investment in Indonesia once touched the US $ 3, 05 billion in 2013.

Must be planned

Another strategy from the government to reach the target of 1 million BPD is through enhanced oil recovery (EOR) activities. According to Tumbur, this EOR activity must be planned from the beginning in the development of an oil and gas block. The reason is that EOR activities will not be effective and will require large costs if they are only carried out when the oil and gas reserves of an oil and gas block are almost gone.

"During the decline, the energy strategy has been lost. If it was only EOR at that time, the cost was more expensive. EOR continues improvement, there are pilots from the start. If it's already [production] road it's difficult to run, "said Tumbur.

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) once made an additional projection of oil production from EOR activities. Referring to the projection, the newly initiated EOR activities can significantly increase oil production starting in 2025. Referring to the data, national oil production is projected to only be 281 thousand BPD by 2030 if no EOR activities are carried out. However, if the EOR is successfully implemented, oil production can be bent to 520 thousand BPD that year.

However, at present, the EOR activities are still in the pilot phase. PT Pertamina (Persero) through Pertamina EP has implemented EOR in Tanjung Field. The company has also signed the points of understanding between Pertamina and Repsol for full-scale management, including the implementation of surfactant-polymer EOR. In the Jirak and Rantau Fields, Pertamina is conducting a study of the application of surfactant chemicals for the implementation of EOR in both fields.

Furthermore, related to CO2 flooding, Pertamina is currently conducting studies in several fields, namely Jatibarang, Sukowati, and Ramba. Pertamina also expanded this EOR activity to the oil and gas block managed by PT Pertamina Hulu Energi (PHE), namely in the North West Java Offshore Block, precisely in the Zulu Field and E-Main. In addition, in the near future the Batang field, which is operated by PHE Siak, will be an EOR steam flooding pilot project.

Investor Daily, Page-9, Thursday, May 9, 2020

Additional Oil and Gas from the Bukit Tua Phase-3 Project

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) ensures one more oil and gas project has been operating onstream this year.

Dwi Soetjipto

Head of SKK Migas Dwi Soetjipto said that the Bukit Tua Phase-3 Field development project managed by Petronas Carigali Ketapang II Ltd had been onstream at the beginning of the second quarter-2020. 

Blogger Agus Purnomo in Petronas Carigali Ketapang II Ltd

   Previously, there were four projects that had been streamed in the first quarter of 2020, namely the Grati Pressure Lowering project, the Randugunting Gas Field development project, the Buntal-5 Gas Field development project, and the construction of the Sembakung Power Plant. The projects provide an additional 80 mmscfd of gas production and generate 4 megawatts (MW) electricity.

Dwi said the project, with an investment of US $ 15.1 million, was completed on time despite being overshadowed by the Covid-19 pandemic. The Bukit Tua Phase-3 Field Project is projected to increase gas production by 31.5 million standard cubic feet per day (mmscfd) and oil by 3,182 barrels of oil per day (bopd).

"The development of Bukit Tua Phase-3 is a very important project, considering the additional oil and gas production is very large and very beneficial for consumers, especially in East Java," Dwi said.

                                Blogger Agus Purnomo in SKK Migas

This year, SKK Migas is targeting 11 onstream projects. For this reason, Dwi appreciates Petronas's steps in completing the Bukit Tua Phase-3 project.

Kontan, Page-13, Monday, May 4, 2020

Upstream Oil and Gas Industry Asked to Maintain Activities and Avoid Layoffs

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) requests that the upstream oil and gas industry continue to maintain operations and avoid termination of employment (PHK), in order to maintain the continuity of the industry in the following years, despite being affected by the Covid pandemic. 19 and low world oil prices.

The Head of SKK Migas Dwi Soetjipto said that the achievement of the APBN target in the first quarter was very good, but in the future what was prioritized was how to prevent activities being stopped and no layoffs.

He added, by maintaining upstream oil and gas operations, including in various drilling, maintenance, and other operational programs, the sector was expected to continue to drive the national economy, create a multiplier effect for the regional economy and supporting industries, and maintain the availability of employment.

"Like the blood that continues to flow, the upstream oil and gas industry is expected to continue to drive the pulse of the Indonesian economy," Dwi said.

Meanwhile, SKK Migas Deputy for Operations Julius Wiratno said that until now the commitment of the Cooperation Contract Contractors (KKKS) to achieve the production target is still maintained. From the 1st quarter of 2020 data shows that, for oil production, 7 KKS Contractors exceeded the National Budget target and 8 KKKS exceeded the technical targets in the 2020 Work Plan and Budget. Whereas for gas distribution 5 KKS Contractors were able to exceed the National Budget target and 12 KKS Contractors exceeded the technical target Work Plan and Budget 2020.

SKK Migas has sent a letter of appreciation for KKKS who achieved the target in 2019 and the first quarter of 2020, as well as a warning letter for KKKS that did not reach the target in the first quarter of 2020. In that letter, SKK Migas also submitted input and recommendations for each KKS Contractor based on monitoring the implementation of the Work Plan and Budget and other monitoring so that in the second quarter of 2020 until the end of the year, KKKS who have not yet reached the target can implement the SKK Migas recommendations and those who achieve the target can look for operational ways and innovations so that the achievements obtained can be further improved.

In addition to the operational aspects, SKK Migas through the letter reminded the PSC Contractors to implement the principles of work safety and environmental protection so that the incident rate in the second quarter and until the end of 2020 can be maintained at the specified level.

On Target

Meanwhile, SKK Migas also seeks to prevent the four strategic upstream oil and gas projects from being late in operation despite the Covid-19 pandemic. All projects are targeted to be completed in stages until 2027. SKK Migas Head Dwi Soetjipto said, although the Covid-19 pandemic affected the progress of upstream oil and gas work, the oil and gas contractor working on the four national strategic projects was still committed to completing the project on time.

Jambaran-Tiung Biru Field (JTB)

These four projects are the development of the Train-3 Tangguh Refinery, Jambaran-Tiung Biru Field (JTB), the Masela Block, and the Indonesia Deepwater Development (IDD) Project. One project that is quite constrained by Covid-19 is the development of the Abadi Field, the Masela Block.

Inpex Corporation

"But we are still discussing with Inpex so that onstream (operations) will not retreat from 2027," Dwi Soetjipto said.

Dwi Soetjipto explained the existence of a pandemic hampered the work on the gas project field survey. In order to prevent the spread of Covid-19 from mobility restrictions, a field survey for the Abadi project could not be carried out.

"Maybe there will be a speedup in the coming year," he said.

In addition, a pandemic that suppressed energy demand and global oil prices, Dwi said also made marketing gas that would later be produced from the Abadi Project difficult.

"First of all, what is still constrained is that prospective buyers are still waiting and seeing," he said.

In fact, a commitment to purchase gas is needed so that the Abadi Project can reach the final investment decision / FID stage which is targeted by the end of 2021. So far, Inpex has just obtained a commitment to purchase gas by PT PLN (Persero) 2-3 million tons per year and PT Pupuk Indonesia (Persero) 150 million standard cubic feet per day / mmscfd. At least, around 80% of the 9.5 million tons per year gas production must have a purchase commitment so that FID can be achieved. Constraints due to the Covid-19 pandemic, also experienced by the Train-3 and Jambaran-Tiung Biru Refinery Project.

"But the Train-3 Tangguh Refinery Project will still be on stream (operation) in 2021. Then, JTB is still committed to onstream in 2021," he said.

While the Jambaran-Tiung Biru Project works until the end of March, still referring to SKK Migas data, it still reached 57.91% of the target of 58.17%. So that the project's operating schedule is expected to be slightly delayed from initially the third quarter of 2021 to the fourth quarter of the same year.

The US $ 1.53 billion projects will produce 190 million cubic feet of gas per day / mmscfd. Pertamina EP Cepu President Director Jamsaton Nababan once revealed that the JTB Project was a little late compared to the schedule. However, this delay range is still fairly reasonable and can still be pursued.

It has prepared a number of strategies to pursue this delay. In April-May, he was optimistic that he could return the JTB Project's progress according to plan. The investment value of these four national strategic projects reaches the US $ 37.21 billion. While the additional oil production is 65 thousand BPD and 3,484 mmscfd of gas.

Investor Daily, Page-9, Monday, May 4, 2020

Repsol and Pan Orient Exit the East Jabung Block

     Repsol SA and Pan Orient Energy said that they would divest ownership of the East Jabung Block after exploration activities did not find oil and gas reserves. Both companies must finalize their exact commitments before leaving the oil and gas block.

the East Jabung Block

     Deputy Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Fatar Yani Abdurrahman said the two oil and gas companies had expressed their intention not to continue developing the East Jabung Block. 

     This decision was made after the discovery of oil and gas reserves from drilling the Anggun-1 exploration well last year. However, the two companies have not yet submitted an official letter on the decision.

"In March there has been no official discussion about the KKKS (cooperation contract contractor) stopping this. We will ask again the KKKS commitments, "he said.

     He explained that if the Anggun-1 drilling had succeeded in finding oil and gas reserves, the contractor would continue drilling the Cantik-1 and Anggun-2 wells. However, because drilling failed to find oil and gas reserves (dry holes), the exploration activities in the East Jabung Block were decided to stop.

"If it is also continued exploration activities there might not be oil and gas findings. In fact, drilling a well for Anggun-1 costs the US $ 30 million, "he said.

     Referring to SKK Migas data, drilling Anggun-1 wells is part of the exact commitment agreed by the contractor with the government when given an extension of the exploration period at the beginning of last year. The Anggun-1 well was drilled on November 14, 2019, and completed on December 10 of the same year.

Repsol

     Besides drilling the Anggun-1 well, other commitments promised were geological and geophysical studies (G&G) and drilling of two more wells. This year, it is planned that Repsol and Pan Orient will undertake two G&G studies and drilling Anggun-2 or Cantik-1 wells depending on the results of the Anggun-1 well drilling.

     After the decision of Repsol and Pan Orient to end activities in the East Jabung Block, SKK Migas reminded that the contractor must still fulfill the obligations of the seventh and eighth work commitments as agreed upon when given an extension of the exploration period.

Investor Daily, Page-9, Saturday, May 2, 2020