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Upstream Oil and Gas Getting More Difficult


    The upstream oil and gas industry needs time to recover because contractors are still looking at the extent of the impact of the pandemic, which is currently booming.

    The Covid-19 pandemic, which was accompanied by a surge in new cases, forced the government to tighten people's mobility, making it more difficult for the upstream oil and gas industry to revive this year.

    This was acknowledged by the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto who stated that the Covid-19 pandemic had put pressure on the upstream oil and gas industry. The implementation of a number of upstream oil and gas activities was finally hampered.

"Some upstream oil and gas activities have been delayed for 1 to 5 weeks," said Dwi.

    A number of disrupted activities include 234 kilometers (km) of 2D seismic surveys, 165 km² of 3D seismic, six exploration wells, 12 development wells, and three development projects.

    In an effort to support the increase in oil and gas production, until June 2021, 186 development wells have been drilled, 309 workover activities, and 11,307 well service activities have been carried out. The realization is still far below the target set.

Blogger Agus Purnomo in SKK Migas

    In 2021, SKK Migas targets drilling 616 development wells. This number increased from the realization in 2020 which was only 240 wells.

    For workover activities, SKK Migas targets 615 wells, while well service activities are targeted at 26,431 activities.

    Meanwhile, during the first semester of 2021, SKK Migas recorded that the realization of ready-to-sale production or oil and gas lifting reached an average of 1.63 million barrels of oil equivalent per day (boepd) or only reached 95.6% of the 2021 APBN target of 1. 71 boepd.

    Dwi explained that entering the beginning of the year, the upstream oil and gas industry had started with low achievements with a production reduction of 19,500 bopd.

    He said there were unplanned shutdowns in a number of work areas which resulted in a production reduction of 4,000 bopd and a delay in drilling and drilling results which reduced production by 5,000 bopd.

"The outlook can be 680,000 barrels of oil per day, gas from the targeted 5,600 MMscfd, the proposed KKKS 5,100 MMscfd, and the proposal can be 5,108 WP&B and because there is a low entry point, it is projected to reach 5,529 MMscfd," he explained.

    According to him, the Covid-19 pandemic has made operational activities inefficient due to a reduction in manpower in the field.

    From a financial point of view, the price of oil that had fallen last year has disrupted the cash flow of cooperation contract contractors (KKKS) so that investment activities have stalled.

"We need time because contractors are also looking at the extent of the impact of the pandemic, which is currently booming," he said.

    SKK Migas Deputy Operations Julius Wiratno added that the reduced mobility of people and equipment during the Covid-19 pandemic was indeed felt by the upstream oil and gas sector, which in turn had an impact on operational activities.

    According to him, throughout the year operational activities are still quite challenging. This will certainly affect the long-term program (LTP) that has been set by SKK Migas.

"The correlation with LTP will be corrected, we are setting terms and conditions from this year to increase next year, but in fact, we will decrease by 3% -4% from the estimate," he explained.

    Meanwhile, during the first 6 months of this year, there were 10 out of 15 KKKS that recorded lifting realizations below the target of this year's APBN.


    ExxonMobil Cepu Limited (EMCL) recorded a red report card with the realization of oil lifting of 208,936 bopd. This record is still lower than the 2021 State Budget target set at 219,000 bopd.

    Apart from ExxonMobil Cepu Limited (EMCL), another KKKS that are below the target is Chevron Pacific Indonesia (CPI) with a lifting realization of 160,646 bopd or only 97.4% of the 2021 APBN target, which is 165,000 bopd.


    PT Pertamina EP is also a KKKS that recorded a red performance with the realization of oil lifting only 71,420 bopd or 84% of the APBN target of 85,000 bopd.

    Pertamina Hulu Energi ONWJ Ltd recorded the realization of 27,615 bopd or 98.6% of the 2021 APBN target of 28,000 bopd.

    Another Pertamina group that recorded below-target performance was Pertamina Hulu Energi OSES with the realization of 24,594 bopd or 91.1% of the 2021 APBN target of 27,000 bopd.

    Pertamina Hulu East Kalimantan reported the realization of 9,174 bopd or 87.4% of the 2021 APBN target of 10,500 bopd.

    Minor results were also recorded by Pertamina Hulu Sanga-Sanga with a lifting of 11,807 bopd or 99.2% of the APBN target of 11,900%. BOB Bumi Siak Pusako-Pertamina Hulu only reached 95.9% of the APBN target of 9,000 bopd with a realization of 8,913 bopd.


    Next is Petrochina International Jabung Ltd which recorded a Red report card with the realization of 14,823 bopd or 92.6% of this year's APBN target of 16,000 bopd.

    On the other hand, for the realization of natural gas lifting, almost all KKKS have succeeded in exceeding the target set in the 2021 State Budget. However, there are several KKKS experiencing gas absorption problems.


STILL DEPRESSED

    Executive Director of the National Oil and Gas Company Association (Aspermigas) Moshe Rizal believes that the Covid-19 pandemic has made operations in the field quite challenging.

    In addition, KKKS still do not dare to increase their investment during the Covid-19 pandemic. The problem is, even though production is already running, increasing production cannot be separated from the need for investment.

"The government must immediately overcome this pandemic so that operations can run normally again. At the very least, to restore investor interest, incentives must be provided,” he said.

    Meanwhile, ReforMiner Executive Director Komaidi Notonegoro said referring to the realization of Indonesia's lifting since 2000, the results obtained usually do not reach the target and lead to a downward trend.

    In addition, the Covid-19 pandemic that has occurred since last year has again made the lifting target set by the government difficult to achieve due to the disruption of operational activities.

"However, conditions before the pandemic had shown a downward trend," he explained.

Bisnis Indonesia, Page-4, Monday, July 19, 2021

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