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Saturday, July 31, 2021

Chevron Completes 100 Wells, Pertamina Continues to Drill 130 Wells

    PT Pertamina Hulu Energi (PHE) through its subsidiary, PT Pertamina Hulu Rokan (PHR), will drill 130 wells in the Rokan Block this year, continuing drilling by PT Chevron Pacific Indonesia (CPI) which has reached 100 wells. Wells, drilling is needed to maintain the level of oil production in this oil and gas block.

the Rokan Block Chevron

    PHE Development and Production Director Taufik Adityawarman said optimizing the production of the Rokan Block is one of the strategies to achieve the company's oil and gas production target this year. For this reason, once the management shifts to Pertamina on August 9, it will increase the drilling of wells in this block.

PHR plans to drill approximately 130 development wells in 2021 which includes the remaining wells from PT CPIPHR is also preparing approximately 290 wells in 2022. This is the oil and gas block with the highest number of Wells investments," he said at the Upstream Subholding Media Gathering.

    To support the Wells drilling target, the company will also add 10 drilling rigs. So, there will be a total of 16 drilling rigs and 29 rigs for workover and well services operating in the Rokan Block. The procurement of this rig is a mirroring of the previous contract.

    Meanwhile, in its official statement, PT CPI as the existing operator stated that it has completed drilling 100 wells, including 11 conversion wells, in the Rokan Block since the end of December 2020. CPI has also succeeded in adding rigs so that now there are 8 drilling rigs actively operating in the field.

“The Rokan Block is an important strategic asset for state and regional revenues, the community's economy, and national energy security. The collaboration between SKK Migas, PT CPI, and PT Pertamina Hulu Rokan (PHR) is going well so that the drilling program can take place safely and smoothly," said the Director of Rokan PT CPI Budianto Renyut.

Blogger Agus Purnomo SKK Migas

    The Head of Representative for the Special Task Force for Upstream Oil and Gas (SKK Migas) Northern Sumatra Rikky Rahmat Firdaus revealed that his party is committed to assisting, facilitating, and coordinating with stakeholders in the region to complete preparations for the drilling implementation so that it can be carried out smoothly and efficiently. safe.

"It takes full support from all stakeholders from the center to the regions so that the target to maintain and maintain production in the Rokan Block can be achieved. This method will increase state revenue,” said Rikky.

    To ensure the availability of supplies of materials to support the drilling program, PT CPI and PHR have signed a joint utilization agreement of state-owned warehouse facilities in the Rokan Block on April 21. Thus, PHR can begin to import and store materials to support the drilling program in warehouses managed by PT CPI in Duri and Dumai.

    These materials include pipes, conductors, casings, tubing, wellheads, valves, cables, and bobbing pumps. Currently, a number of PHR materials have arrived at PT CPI's warehouse.

"Hopefully, after the date of the transfer of management later, the drilling program can continue without any disruption to material supply because PHR's materials are already available in the field," said Budianto.

Investor Daily, Page-9-Saturday, July 31, 2021

As of June, Pertamina's Oil and Gas Production Reaches 850 Thousand BOEPD

    PT Pertamina Hulu Energi, the Upstream Subholding of PT Pertamina (Persero), recorded the realization of oil and gas production in the first half of this year at 850 thousand barrels of oil equivalent per day/BOEPD, below the target of 974 thousand BOEPD. 

    However, the company is optimistic that it can achieve the oil and gas production target that has been set this year. PHE Development and Production Director Taufik Adityawarman said the company's contribution to oil and gas production came from domestic and foreign oil and gas blocks.

"In total, oil production is 390 thousand barrels per day (BPD) and gas is 2.665 million standard cubic feet per day / MMscfd, so that when totaled it becomes 850 thousand BOEPD," he said at the Upstream Subholding Media Gathering.

    The realization of 850 thousand BOEPD is still 87.27% of the Company's Work Plan and Budget (RKAP) target of 974 thousand BOEPD. In detail, the realization of oil production of 390 thousand BPD is only 75.44% of the target of 517 thousand BPD, while gas of 2,665 MMscfd actually exceeds the target of 2,648 MMscfd. 

    He detailed that Regional I Sumatra under the management of PT Pertamina Hulu Rokan (PHR) recorded oil production of 49 thousand BPD and 568 MMscfd of gas. Regional II Java by PT Pertamina EP produces 66 thousand BPD oil and 445 MMscfd gas.

    Regional III-Kalimantan under PT Pertamina Hulu Indonesia contributed 64 thousand BPD oil and 691 MMScfd gas. Regional IV-Eastern Indonesia under PT Pertamina EP Cepu (PEPC) produces 114,000 BPD of oil and 490 MMscfd of gas. Thus, the company's four domestic regions recorded oil production of 293,000 BPD and 2,194 MMscfd of gas. Furthermore, the contribution from foreign assets or Regional V under PT Pertamina Internasional EP is 97 thousand BPD for oil and 311 MMscfd for gas.

    From the operational performance, it has realized 6 exploration wells and is working on 3 other wells. Then, the realization of 2D seismic along 1,186 kilometers (km) and 3D seismic covering an area of ​​201 square kilometers (km2).

"Then the realization of exploitation wells has 101 wells and 20 ongoing wells, 241 workover wells, and 5,085 well intervention wells have been carried out," he said.

    For additional reserves, as of June, PHE has recorded additional 1P reserves of 36.3 million barrel oil equivalent/MMBOE, and Contingency Resources 2C reserves of 37.8 MMBOE. The implementation of Community Activity Restrictions (PPKM), Taufik admits, has caused some problems in its operations. 

    Domestically, some assets must be stopped operating within a certain period of time because more than 50% of workers have been exposed to Covid-19. Abroad, where activity restrictions are also being carried out, his party must stop operations at floating storage and loading and unloading facilities / FSOs in Malaysia because of the ongoing exposure to Covid-19.

    However, he stressed that his party has prepared several mitigation measures to restore the lost oil and gas production recovery plan. This recovery plan is applied to assets that still have very high production levels. As another strategy, his party will optimize additional production from the Rokan Block managed by PHR as of August 9, 2021.

"Hopefully oil and gas production by the end of the year can be recovered," said Taufik.

Asset Acquisition

    Taufik added that the company's oil and gas production is targeted to be boosted to 1 million bpd for oil and 4,000 MMScfd for gas by 2024. One of the strategies undertaken to achieve this target is by acquiring assets from overseas oil and gas blocks. The reason is, with the realization as of last June, there is still a difference in oil production of 600 thousand bpd and 1,400 MMscfd of gas that must be pursued.

“Departing from that, the hope for the future is acquisitions. The current acquisition, we have participated in the bidding,” he said.

    Unfortunately, he did not mention which block bidding auction the company was participating in. He explained that the acquisition of assets abroad needed to be done because there were no giant discoveries in Indonesia. 

the Cepu Block

    The last giant discovery found in the country was the Cepu Block in 2001, while the gas discovery was the block that supplied the Tangguh LNG Plant in the 1990s. In selecting the assets to be acquired, continued Taufik, his party will consider the level of the reserve to production (R to P) of the oil and gas block. It targets to increase the company's R to P from the current level of 7 to 10.

"What are the criteria [of the targeted oil and gas block], which still have large reserves, large R to P, and large production volumes," he added.

    Previously, Director of Oil and Gas Program Development at the Ministry of Energy and Mineral Resources (ESDM) Dwi Anggoro Ismukurnianto said that in order to achieve the national oil production target of 1 million bpd by 2030, the acquisition of oil and gas fields abroad must be carried out by national oil and gas companies, both state-owned and private. 

    To that end, the government will facilitate acquisitions through bilateral cooperation, starting with G to G (government to government). Currently, Pertamina has a number of oil and gas blocks in 12 countries. In Algeria, the company owns shares in the Menzel Lejmet North (MLN), El Merk (EMK), and Ourhoud (OHD) blocks.

    In Iraq, the company holds shares in West Qurna 1 Field. While in Malaysia, the company holds shares in Block K, Block Kikeh, Block SNP, Block SK309, and Block SK311. Furthermore, after the acquisition of the French oil and gas company, Maurel&Prom, the company has oil and gas assets spread across Gabon, Nigeria, Tanzania, Namibia, Colombia, Canada, Myanmar, Italy, and other countries. However, its main assets that are already producing are in Gabon, Nigeria, and Tanzania.

Investor Daily, Page-9, Saturday, July 31, 2021

Thursday, July 29, 2021

Accelerating EOR Implementation, Oil and Gas Companies are Encouraged to Partner

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif encourages oil and gas companies to cooperate with other parties to realize advanced oil recovery (EOR) activities. The implementation of this activity is one way to achieve the oil production target of 1 million barrels per day (BPD) in 2030.

    Arifin said that accelerating the implementation of advanced production, both secondary and tertiary recovery, needs to be done to achieve the oil production target of 1 million bpd and gas 12 Billion Standard Cubic Feet Per Day/BSCFD by 2030. This acceleration is expected to provide additional contributions to national oil production. For this reason, cooperation contract contractors (KKKS) are encouraged to partner with other parties so that the EOR project can be started immediately.

“To realize the goals in 2030, several EOR projects must be planned and carried out immediately. The government also encourages KKKS to establish strategic cooperation with other parties who have competence and experience in the development and implementation of EOR," said Arifin.

Blogger Agus Purnomo in SKK Migas

    Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said that there were 23 EOR projects scheduled to operate in stages until 2030. Regarding the progress of the EOR implementation, 23 fields are still in the study stage. Meanwhile, one field is working on a field trial and one field is in the process of discussing a development plan (POD).

    Of the 23 EOR projects, most of them are Pertamina Group projects. In detail, PT Pertamina Hulu Rokan will run 7 EOR projects, PT Pertamina EP 2 projects, PT Pertamina Ogan Komering 2 projects, PT Pertamina Hulu Energi North West Java (ONWJ) 2 projects, PT Pertamina Hulu Offshore South East Sumatra (OSES) 2 projects, PT Pertamina Hulu Energi Siak 1 project, PT Pertamina Hulu Mahakam 1 project, and PT Pertamina Hulu Energi Tuban 1 project.

    In addition, BOB Bumi Siak Pusako will work on 1 EOR project, PT Energi Mega Persada (EMP) 1 project, Medco E&P Indonesia 1 project, and Petrogas 1 project. Referring to SKK Migas data, the full scale implementation schedule for these EOR projects is Minas and Batang in 2024, Bekasap and E-main in 2025, Zulu in 2026, Tanjung, Rama, and Handil in 2027, Pedada, Sukowati, Gemah, Melibur, and Walio in 2028, Duri Ring, Bekasap, Kulin, Balam South, Bangko, and Kaji Hopefully in 2029, and Air Serdang, Guruh, Krisna, and Mudi in 2030.

    Previously, SKK Migas Deputy Operations Julius Wiratno said that his party together with Pertamina were finalizing the POD of EOR implementation in the Rokan Block. One of them is the implementation of surfactant EOR in Minas Field, Rokan Block. The POD is targeted to be approved this year as well. If successful, this step is expected to contribute to the production of the Rokan Block in 2023-2024.

Transfer Manage

    Arifin also revealed the importance of proper and effective management transfer of terminated oil and gas blocks in maintaining national oil and gas production this year, which will also have an impact on the 2030 target. For this reason, Arifin reminded SKK Migas to continue to oversee the transfer of management of the Rokan Block from PT Chevron Pacific Indonesia ( CPI) to PT Pertamina Hulu Rokan (PHR) on 8 August.

"To maintain the level of national oil and gas production, I have a special message that the transfer of management of the Rokan Block is properly guarded so that the transfer of management process can take place smoothly without disturbing the level of oil production in this block," said Arifin.

    He admitted that this year was very challenging for the upstream oil and gas industry. The realization of oil lifting to date is still at 666.6 thousand BPD and gas at 5,430 million standard cubic feet per day/MMscfd. Meanwhile, the target of the State Revenue and Expenditure Budget is 705 thousand BPD for oil lifting and 5,638 MMScfd for gas.

"2021 will be a year of proving the resilience of the upstream oil and gas industry to maintain production," he said.

    Julius had said that his party was optimistic that oil production in the Rokan Block could rise again despite the transfer of management. The reason is, even now, there are indications of an increase in production by carrying out massive Wells drilling during the operatorship transition period. Next year, the production of this block is expected to return to the level of 175-180 thousand BPD.

    The implementation of Wells drilling is one of the nine issues monitored by SKK Migas in the transfer of management of the Rokan Block. Until now, the realization of drilling development wells in the Rokan Block has reached 83 wells from the target of 180 wells this year. Furthermore, the realization of rework (workover) wells as many as 40 wells from the target of 39 wells, and well services (well services) 5,135 activities out of a target of 6,819 activities.

Investor Daily, Page-10, Thursday, July 29, 2021

Allotment of 10% BUMD shares in 26 Oil and Gas Blocks Processed

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) noted that as of April 2021, 26 oil and gas blocks were still in the process of transferring 10% participating rights to Regional Owned Enterprises (BUMD).

Blogger Agus Purnomo in SKK Migas

    Head of the Program and Communication Division of SKK Migas Susana Kurniasih revealed, in general, the process of transferring 10% participating shares to BUMDs does take time.

"Usually the governor has not determined which BUMD will represent or the Contractor of the Same Affected Contract (KKKS) has not offered PI to the regional government," he explained.

    In addition, the other process, namely BUMDs still has to complete data according to the provisions in the applicable regulations, namely the Minister of Energy and Mineral Resources Regulation Number 37 of 2016. The Indonesian Petroleum Engineering Expert Association (IATMI) considers that there needs to be a change in the 10% Participating Interest share allocation scheme for BUMDs.

    Hadi Ismoyo, Secretary-General of IATMI who is also the President Director of PT Petrogas Jatim Utama Cendana, said that the 10% PI governance for BUMDs contained in Government Regulation Number 37 of 2016 still faces many challenges, one of which is the reduced internal rate of return (IRR) of contractors oil and gas.

    Hadi said that previously BUMDs were allowed to cooperate with partners, but this time it is not allowed. He hopes that there is a middle ground that can be taken.

"It is a legal construction as it is now, but the articles that might become a negative list for investors are corrected," he said.

    In addition, under the current regulations, the contractor must first pay for the financing.

"From the perspective of BUMD, of course, it is very profitable, but in my opinion, it is not fair. Second, sometimes because everything is borne by the contractor first, it seems that our voice is lost," said Hadi.

    From an economic point of view, this has an impact on the reduction of the contractor's IRR, especially when the bailout funds are charged without interest. Referring to the Regulation of the Minister of Energy and Mineral Resources Number 37 of 2016 concerning Provisions for Offering 10% PI in Oil and Gas Working Areas Article 12 Paragraph 5 it is stated that the return on financing as referred to in paragraph (3) is taken from the share of BUMD or regional companies from oil production and or natural gas according to the cooperation contract without interest.

    Hadi also considered that a number of payment obligations should still be carried out by BUMD as part of investment and train BUMD to be professional in running a business. Hadi also confirmed that there needs to be a re-discussion regarding the current provisions.

“It takes professionals in the oil and gas sector to implement 10% PI governance. BUMD managers must be slim and agile and fast in making and processing strategic decisions," added Hadi.

    For the East Java Region, there are still five oil and gas blocks that are currently in the process of transferring the 10% PI to BUMD. The five oil and gas blocks are the Kangean Block, the Ketapang Block, the West Madura Offshore (WMO) Block, the Tuban Block, and the Brantas Block.

    There are a number of oil and gas blocks whose contracts have expired in 2020 and have officially changed their management. Thus, the transfer of 10% participation rights to BUMD will also be carried out in the oil and gas block.

    The blocks include Block B South Jambi. Then the Salawati Block where Petrogas Ltd through its subsidiary Petrogas (Island) Ltd officially manages the Bird's Head Salawati Block in Sorong Regency, West Papua as of April 23, 2020. On the other hand, there are three oil and gas blocks whose contracts expire this year, namely the Bentu Segat Block, Rokan Block, and Long Strait Block.

 Kontan, Page-12, Wednesday, July 28, 2021

Protests on Chevron's Waste Scattered in Riau

    Protests due to spilled waste oil in Rokan Hilir, Bengkalis, Siak, and Pekanbaru, West Sumatra continue to spread. Yesterday, it was the turn of the community leader, Arsadianto Rachman, who said that the incident should not be ignored.

    Does this nation want to pass the waste to posterity? It can't be. I will not let that happen,” said the character who is familiarly called Anto Rahman, in Pekanbaru, Riau, yesterday.

Credit Foto : Riau Pagi

    The spilled waste oil is thought to have come from the rest of the production of PT Chevron Pacific Indonesia (CPI). The company is known to end its work contract on August 8. A number of residents whose land was contaminated with waste oil admitted that they had not received compensation and that there was no effort from the company to carry out dialogue.

    Anto, who is also the chairman of the Riau Pancasila Youth Regional Leadership Council, admitted that he had asked the Pancasila Youth ranks from the sub-district level to oversee the waste problem. 

    He also supports the efforts made by the Indonesian Forest Destruction Prevention Agency (LPPHI) which filed an environmental lawsuit to the Pekanbaru District Court on behalf of the residents who were harmed by Chevron.

"This is our joint effort to save the environment, for future generations," explained Anto.

    He hopes that the panel of judges who will hear the environmental lawsuit will side with the community.

"We are confident that the assembly will provide justice for the people of Riau."

the Rokan Block Chevron

    The Riau Environment and Forestry Service noted that Chevron's pollution occurred in community-owned areas and forests. They received 279 public complaints, with a total of 1.6 million hectares of waste contaminated land. Chevron has been operating in the Rokan Block since 90 years ago. If left unchecked, they will walk away on August 8 leaving environmental damage in Riau.

Media Indonesia, Page-7, Monday, July 26, 2021

Post-Transfer of Management, Production of Rokan Block Is Believed to Increase

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) and PT Pertamina Hulu Rokan (PHR) believe that through the efforts that will be carried out after the transfer of management from PT Chevron Pacific Indonesia (CPI) on August 9, 2021, oil and gas production in the Rokan Block in Riau Province will increase.

the Rokan Block Chevron

    This is the conclusion of the discussion on the theme of Maintaining the Reliability of Operations in the Rokan Region, which was held virtually by the Energy and Mining Editor Society (E2S) in Jakarta. 

Blogger Agus Purnomo In SKK Migas

    Appearing as speakers at the discussion was Deputy Head of SKK Migas Fatar Yani Abdurrahman, PHR President Director Jaffee Arizon Suardin, and Secretary-General of the Indonesian Petroleum Engineering Experts Association (IATMI) Hadi Ismoyo.

“All items have been identified. So now the point is, it must be massive, aggressive, efficient, resilient, tough, and out of the box, beyond normal limits," said Fatar Yani.

    Fatar Yani said the longest contributing oil and gas block in Indonesia and still has attractive potential is the Rokan Block. The Rokan Block has been the backbone of national oil production for 70 years since its first production in 1951 by Chevron. The fate of the block has been determined since 2018. At that time it was still a top producer so the transition process began in a long time.

“So this long transition can be done seamlessly and without any problems. The Rokan Block also has potential reserves in unconventional forms. The most widely operated wells in Rokan, there are 10,000 wells, currently, around 8 thousand are operating," he said.

    According to Fatar, the strategy in managing the Rokan block post-transition for the short term in 2021 is to maintain production and a successful transition to PHR, the 2022-2025 period is an effort to increase production with significant investments including the production of Chemical EOR in Minas. The long-term in 2026 is high production according to PHR Rokan's long-term plan (LTP).

“Considering the enormous contribution of the Rokan block, the Government and SKK Migas have paid attention when this block is in the process of transitioning from contractor PT Chevron Pacific Indonesia (CPI) to PHR. To keep the production of the Rokan block high and optimally maintained, a Head of Agreement (HOA) has been signed between SKK Migas and CPI on September 28, 2020," said Fatar.

    On the other hand, the Rokan PSC does not manage ASR backups. Thus, maintaining the production level of the Rokan WK is very dependent on the return of investment costs. The Head Of Agreement (HOA) agreement, it will guarantee the availability of ASR funds and the return of investment costs can be guaranteed. The number of drilling programs during the transfer of management at HOA was 192 wells.

"However, considering the existing developments, the drilling target has not been achieved. SKK Migas has coordinated with PHR to boost well drilling so that the 2021 production and lifting targets can be achieved," said Fatar.

    PHR President Director Jaffee Arizon Suardin expressed his gratitude for the support and contribution of SKK Migas in the transfer of the management process. With the support from SKK Migas, the transfer of management process is more certain and there is a guarantee, this can be seen from the current process which is felt to be very helpful when managed by PHR.

“Drilling is one of the efforts to maintain the production of the Rokan block, from the target of 192 wells that were previously conveyed by the Deputy Head of SKK Migas, which could not be realized by existing operators, PHR will continue, including the wells planned by PHR. We estimate that assuming 70 wells cannot be completed during the transfer of management, the number of wells that can be drilled until December 2021 will reach around 164 wells," said Jaffe.

    Jaffee said the Rokan Block is different from other blocks because it supports 24% of national oil production. And there are 104 fields spread from north to south.

“This is what we have to manage so that production can be maintained. There are nine priority areas of management transfer. We will continue what has not been completed, starting August 9, with the aim that by 2021 the number of wells will not be less than planned," said Jaffee.

    The former Deputy for Planning of SKK Migas also said that PHR would drill and prepare resources for 161 wells with the assumption that 77 wells had not been completed by the existing operator. Currently, preparations are ongoing. Pertamina has prepared around 16-17 rigs and materials. In fact, these rigs and materials can be used before August 9 to help the existing wells that are being worked on by the operator.

"The goal is that the transfer of management process can run smoothly without interruption," he said.

    According to Jaffee, Pertamina is committed to exploring all existing potentials massively, aggressively, and efficiently. And prepare not only wells to be drilled in 2021, but also in 2022.

“Not chasing the number of wells, we want the number of wells to be the least but the production to be the largest. In this block, many wells are needed,” he said.

    Meanwhile, the Secretary-General of IATMI who is also the President Director of PT Petrogas Jatim Utama Cendana Hadi Ismoyo highlighted the distribution of 10% Participating Interest / PI shares to regions through Regional Owned Enterprises (BUMD), including in the Rokan Block later.

“The challenges include the need for oil and gas professionals to implement 10% PI governance. BUMD managers must be slim and agile, as well as fast in making and processing strategic decisions," said Hadi.

    According to him, the current challenge is the fact that on the ground there are many 10% PIs for various reasons that have not been resolved or have not been given to BUMDs in accordance with the mandate of Ministerial Regulation 37, both for technical and non-technical reasons. 

    In addition, the socialization has not reached the root of the spirit of the 10% PI regarding the rights and obligations of each party. There is also a communication leak between operators and BUMD due to different levels of understanding.

Investor Daily, Page-10, Friday, July 23, 2021

To be efficient, the government must help Pertamina

    The government should be able to help PT Pertamina (Persero) to get a contract to purchase crude oil directly from the National oil company/NOC of another country. Direct import contracts are considered more efficient because they can cut the cost of procuring crude oil.

PT Pertamina (Persero)

    The Executive Director of the Reforminer Institute, Komaidi Notonegoro, said that purchasing crude oil directly from NOCs of other countries would cut the supply chain of crude oil. This will have an impact on cheaper procurement costs, so it is positive for Pertamina, the government, and the community as consumers of fuel oil (BBM).

the Nigerian National Petroleum Corporation (NNPC)

    Pertamina's move to buy crude oil directly from the Nigerian National Petroleum Corporation (NNPC) is considered very positive. However, the company needs to be more aggressive in obtaining long-term direct purchase contracts to secure domestic fuel supplies.

“Generally there is state intervention. The agreement will generally be accompanied by bilateral cooperation in the same sector or other sectors," he said.

    Pertamina is not the first time buying Nigerian crude oil. Previously, for the 2017-2020 period, oil imports from Nigeria reached 30% of the company's total imports. This Nigerian oil belongs to the sweet crude category which is in accordance with the company's refinery specifications.

    However, this crude oil is usually marketed in the international market by International Oil Companies (IOCs) with participating interest (PI) in the oil and gas blocks in the country, such as ExxonMobil, Chevron, Shell, Total, and BP. Thus, this is the first time Pertamina has conducted a direct purchase contract with NNPC. In obtaining this contract, Pertamina must compete with 500 companies that register.

    According to Komaidi, the state usually helps its national companies to obtain similar agreements. He gave an example, the United States government does not even hesitate to intervene directly to help business entities originating from their country, even though they are not state-owned enterprises.

"Especially if this is Pertamina, which is a State-Owned Enterprise (BUMN)," he asserted.

    Currently, Pertamina seems to be left to do it alone. Whereas on the other hand, the government assigns and demands a very large tax contribution and Non-Tax State Revenue (PNBP) from the company. 

    Regarding the crude oil import contract with NNPC, Corporate Secretary of PT Pertamina Indonesia Refinery Ifki Sukarya said the volume will adjust to the development of refinery supply and demand in the coming year. This purchase contract is one of the efforts to ensure a sufficient supply of crude oil at the refinery.

"The estimated volume of crude oil supply from NNPC is currently around 900,000 barrels per quarter," said Ifki.

    Previously, KPI's Vice President of Feedstock & Inventory Management, Sani Dinar Saifuddin, said that Nigeria is Pertamina's largest source of crude oil imports. Meanwhile, the largest oil import is the type of Arabian Light Crude from Saudi Arabia's national oil company, namely Saudi Aramco.

Investor Daily, Page-10, Friday, July 23, 2021

Wednesday, July 28, 2021

Oil and Gas is Still the Mainstay


    The oil and gas industry sector is still relied on as one of the supports for depositing state revenues during the ongoing Covid-19 pandemic.

    In the midst of pressures that hit upstream Oil and Gas last year, the Oil industry was still able to provide deposits to the state worth Rp. 70.45 trillion in the form of non-tax state revenues (PNBP).

    This amount is still higher than PNBP from other non-oil and gas Natural Resources (SDA) sectors, namely minerals and coal. In the same period, the mineral and coal sector 'only' provided income to the state of Rp 34.63 trillion.

    Meanwhile, state income from the Oil and Gas sector comes from the state's share of the exploitation results after taking into account the government's obligations in upstream oil and gas business activities in accordance with contracts and provisions of laws and regulations. Income is also obtained from information services for potential auctions of oil and gas working areas and signature bonuses which are the contractor's obligation.

    This year, the dominance of deposits from oil and gas still dominates. The upstream oil and gas sector throughout the first semester of 2021 has supported US$ 6.67 billion or Rp. 96.7 trillion. The realization has even reached 91.7% of the year-long target set in the 2021 State Budget of US$7.28 billion.

Blogger Agus Purnomo in SKK Migas)

    Head of the Special Task Force for Oil and Gas (SKK Migas) Dwi Soetjipto said that the realization of state revenues could not be separated from oil prices which gradually improved after falling in 2020. With current achievements, Dwi believes state revenues from the upstream oil and gas sector by the end of 2021 will reached Rp. 154 trillion.

"ICP prices show an increase, even as of June 2021 reaching the US $ 70.23 per barrel. We will use this momentum optimally to encourage KKKS to be more aggressive in realizing operational activities," said Dwi.

    For your information, the 2021 State Budget sets the ICP assumption this year at US$ 45 per barrel so that the revenue target set has the potential to be exceeded long before the end of the year. Dwi added that the maximum state revenue is also an effort to optimize upstream oil and gas activities and costs. Activities carried out include selecting work order and maintenance priorities, as well as efficiency in operational activities, particularly due to activity restrictions.

"This effort succeeded in bringing the cost per barrel in the first semester of 2021 to US$ 12.17 per barrel of equivalent oil, lower than the first semester of 2020 of US$ 13.71 per barrel of equivalent oil," explained Dwi.

    Meanwhile, Energy Watch Executive Director Mamit Setiawan believes that the Oil and Gas sector is indeed the backbone of state revenue, both in terms of PNBP and taxes. Moreover, oil prices are in a very good position. According to Mamit, to keep this industry in good condition and attractive, there needs to be another relaxation by the government, especially from a fiscal perspective.

“If it is possible to foster an investment climate that leads to an increase in income, especially PNBP, there is nothing wrong with the government reducing its revenue. It is the same when the government makes a decision to reduce revenue when the gas price is US$6 per MMBtu,” he said.

    He added that the government needs to make a few sacrifices so that our investment climate is attractive and attractive compared to other neighboring countries such as Vietnam and Thailand.

"Besides that, I think legal certainty needs to be rushed in relation to the revision of the law which is currently unfinished," said Mamit.

    The founder of the ReforMiner Institute, Pri Agung Rakhmanto, assessed that if you want the Oil and Gas sector to be more useful, it doesn't need to always be directed as a PNBP producer. According to him, the Oil and Gas sector must first be encouraged to become an economic driver in a broad sense.

"From there, a multiplier effect will be generated for the movement of other related sectors, requiring labor which will ultimately increase tax revenue," he said.


    In another development, PT Pertamina (Persero) through PT Pertamina Hulu Rokan (PHR) will drill as many as 161 wells after the transfer of management in the Rokan Block which will begin on August 9, 2021.

    Pertamina Hulu President Director Rokan Jaffee Suardin said in addition to the planned number of Wells drilling this year, his party would continue the drilling commitments that had been signed by PT Chevron Pacific Indonesia (CPI)

    Jaffee said that there will be an additional 77 Wells from CPI's commitment which will not be completed until the management transfer period on August 9th. In the previous target, Pertamina planned to drill only 84 wells for 2021.

"As of December 161 wells, the target production level is maintained and can increase," said Jaffee.

    According to him, PT Pertamina Hulu Rokan (PHR) has prepared the resources needed to realize the plan. To smooth the Wells drilling plan, as many as 16 to 17 rigs have been prepared. In addition, Jaffee said that human resources and supporting materials have been fully prepared so that when the transition period is over, all activities can start immediately.

“So the goal is that the transfer of management process will run smoothly without any disturbance. We have a target for the lifting to increase with a massive work program," he said.

    Deputy Head of SKK Migas Fatar Yani Abdurrahman said that CPI's failure to achieve drilling during the Rokan Block transition period was due to the difficulty of procuring the number of rigs. According to Fatar, CPI only has about 10 months from signing the investment commitment in the Rokan Block which was signed in September 2020. For the drilling, CPI should have required 10 rigs, but in practice, there are only 6 rigs available.

“Not to mention that the preparation for drilling will take 2 to 3 months. Therefore, we took the initiative to make one program only," he explained.

Bisnis Indonesia, Page-6, Friday, July 23, 2021

2022, Rokan Block Oil Production is Projected to Increase

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that the Rokan Block oil production could be increased to 175-180 thousand barrels per day (BPD) in 2022 after the management shifted to PT Pertamina Hulu Rokan (PHR) in August this. The increase in production was obtained from Well drilling, and the implementation of advanced oil recovery (EOR).

Blogger Agus Purnomo in SKK Migas

    SKK Migas Deputy for Operations Julius Wiratno is optimistic that oil production in the Rokan Block can rise again despite the transfer of management. The reason is, even now, there are indications of an increase in production by doing well drilling during the operatorship transition period. In the ongoing discussion of the 2022 work plan and budget (WP&B), there are also indications that oil production will increase next year.

"The estimate may be that it will return to 175-180 thousand BPD, with massive development, of course, it will directly contribute to production and lifting," he said.

The Rokan Block by Chevron

    The implementation of Well drilling is one of the nine issues monitored by SKK Migas in the transfer of management of the Rokan Block. Until now, the realization of drilling development wells in the Rokan Block has reached 83 wells from the target of 180 wells this year. 

    Furthermore, the realization of work over (workover) wells as many as 40 wells from a target of 39 wells, and well services (well services) 5,135 activities from a target of 6,819 activities.

    In the following years, Julius also believes that the Rokan Block's oil production will continue to increase. The reason is that Pertamina will apply surfactant EOR technology in the block. The Plan of Development/POD for the implementation of EOR is targeted to be approved this year.

"We are working hard for the approval of this EOR POD so that it can be implemented immediately with suitable chemicals and can support it towards full scale as soon as possible," he said.

    He hopes that the implementation of EOR in Minas Field, Rokan Block can be successful. If successful, this step is expected to contribute to the production of the Rokan Block in 2023-2024.

"Perhaps this [Rokan Block] will be an example of an oil and gas block taken by Pertamina whose production does not decrease, but instead increases," said Julius.

    EOR implementation is also one of nine issues monitored by SKK Migas. So far, the data transfer and the conversional chemical EOR model have been completed. Meanwhile, the procurement of surfactant (surfactant chemical) to be used in EOR activities is still in process. 

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

Going Smoothly

    Regarding the transfer of management of the Rokan Block in August this year, the Head of SKK Migas Dwi is optimistic that it will run smoothly.

“The main issue, namely the migration of technical and operational data, has made 94% progress. So we are sure that it can be completed in August,” said Dwi.

    So far, the data catalog and verification have been completed, but they are still waiting for a review and BAP from the Data and Information Center (Pusdatin) of the Ministry of Energy and Mineral Resources. Next, he said the development of the Rokan Block contract management had reached 97%. 

    A total of 282 of the 290 existing contracts have completed the mirroring process. The procurement of materials for 192 has been completed, as well as the procurement of 4 rigs in progress and 3 rigs in the process of the farm in. The progress of electricity, steam, and gas supply has also reached 80%.

“Where PLN has made an agreement with PHR for the supply of electricity and steam. And PLN already has a sales purchase agreement (SPA) with MCTN," said Dwi.

    MCTN or PT Mandau Cipta Tenaga Nusantara is the owner of the power plant that supplies electricity to the Rokan Block. Regarding employment, 99% of workers have received offers from PHR, and the addition of 125 new positions in the PHR Employment Plan (RPTK). Next, the transfer of information technology has reached 83% where a total of 232 applications are needed. 

    In detail, 31 CPI applications were replaced by Pertamina applications, then of the 129 CPI applications that are still in use, 88 applications have been approved and 41 applications are under discussion, and 72 commercial applications are provided by PHR.

    Then, the licensing and operating procedures have reached 98%. Environmental Impact Analysis (EIA/Amdal) has been completed for two locations, and another location is still in process. In addition, 7,611 standard operating procedures (SOPs) have been submitted from CPI to PHR.

"Environmental issues are 100% complete, where the environmental audit and program have been prepared and are waiting for a clean declaration from the KLHK (Ministry of Environment and Forestry)," said Dwi.

    In principle, as many as 157 Environmental Function Recovery Plans (RPFLH) have been completed. The Rokan Block is one of the largest oil and gas blocks in Indonesia. However, the production of this oil and gas block continues to decline. Referring to SKK Migas data, in 2011, the Rokan Block still produced around 356.98 thousand BPD of oil or contributed 39.56% of the total national oil production at that time of 902.35 BPD. 

    However, last year, oil lifting in this block was only around 174,424 BPD or 24.62% of the total national oil lifting of 708,488 BPD. As of June, the realization of the Rokan Block production was recorded at 160,646 BPD or 97.4% compared to the lifting target of the State Budget (APBN) is 165 thousand BPD.

Investor Daily, Page-10, Thursday, July 22, 2021