Phase II Oil and Gas Working Area Auction Brings US$ 14 Million Investment

    A total of four Working Areas (WA/WK) were offered in the Phase II Oil and Gas Block Auction which was held in 2021, all of which attracted investors, and resulted in an investment commitment of US$ 14.14 million and a Signature Bonus of US$ 1.2 million.

BP

    Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji, said that the working area auctioned, namely the North Ketapang Working Area, was won by Petronas Carigali Ketapang II Ltd., the Agung I Working Area was won by BP Exploration Indonesia Limited. 

Blogger Agus R Purnomo in Petronas Carigali Ketapang

    The Agung II Working Area was won by BP West Papua I Limited and the Bertak Pijar Quail Working Area was won by PT Mitra Multi Karya.

Auction For Oil and Gas Working Area Phase II 2022

    The investment details for the Firm Commitment and Signature Bonus are US$ 8.1 million and US$ 500 thousand for Petronas Carigali (PC) Ketapang. BP Exploration has a definite commitment of US$ 2.5 million and a Signature Bonus of US$ 100 thousand. Then the BP West Papua Definite Commitment investment is US$ 1.5 million and the Signature Bonus is US$ 100 thousand.

    Meanwhile, Mitra Multi's Fixed Commitment investment is US$ 2 million and the Signature Bonus is US$ 500 thousand. Tutuka said that he was very interested in the Working Area auction this time, giving a positive signal for Indonesia's upstream oil and gas investment at a time of challenging global conditions. 

    In the next stage after the announcement, the Government will send an official notification of the winner and the winner of the auction must submit this letter of intent within 14 working days of receiving the notification of the winner.

    In accordance with the Regulation of the Minister of Energy and Mineral Resources Number 35 of 2021, the signing of the Cooperation Contract is carried out no later than 60 calendar days from the announcement of the winner today.

"For this reason, we hope that the winning bidders can immediately prepare the required documents for signing the KKKS," he said.

Regarding Offer privileges

    Participating Interest 15% PT Pertamina (Persero), Pertamina gets 15% Participating Interest Offering Shares in accordance with the provisions in the Bid Document in accordance with the ESDM Ministerial Regulation Number 35 of 2021, the Government will also submit this to Pertamina.

    In addition to the announcement of the Working Areas, there is currently a Regular Auction for the Oil and Gas Working Area Phase II 2021 which consists of four Working Areas, namely Karaeng, Maratua II, Pope, and West Palmerah. The schedule for access to Bidding Documents is still open until March 24, 2022, while the submission of Participation Documents is from March 24 to 25, 2022.

    Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji, said that the working area being auctioned, namely the North Ketapang Working Area was won by Petronas Carigali (PC) Ketapang II Ltd, and BP Exploration Indonesia Limited won the Agung I Working Area. The Great II Working Area was won by BP West Papua I Limited and the Pijar Puyuh Bertak Working Area was won by PT Mitra Multi Karya.

Investor Daily, Page-10, Monday, March 21, 2022

FRESH WIND FROM PETRONAS AND BP

 

    The national upstream oil and gas industry gets fresh air from the commitments of Petronas and BP in three of the four work areas offered by the government through the Ministry of Energy and Mineral Resources.

BP

    The inclusion of Petronas and BP in the Working Areas (WK) or oil and gas blocks North Ketapang, Agung I, and Agung II is considered as the success of the government is seeking to improve the investment climate in the country.

    Moshe Rizal, Executive Director of the Association of National Oil and Gas Companies (Aspermigas), said Petronas in the North Ketapang WK, and BP in the Agung I and Agung II WKs is a good thing. The reason is that the two companies are large National Oil Company (NOC) and International Oil Company (IOC).

Blogger Agus Purnomo in Petronas PC Ketapang 

"We hope like that, we will see the realization in the next three years," he said.

    Moshe also hopes that the government will continue to support oil and gas companies in realizing their investment in the country, especially when conducting exploration activities.

"The challenges that will be faced are both technical and non-technical, and the exploration stage is always the riskiest period."

    When announcing the winner of the direct bid bidding for the oil and gas Working Area phase II 2021, Director General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM) Tutuka Ariadji said that the terms and conditions offered by the government this time received a good response from the cooperation contract contractors or KKKS.

“We also received input from KKKS that the terms and conditions offered in this auction are very attractive, and their terms are solid. We can see that in Working Area with high risk, the split can be up to 50-50, and if the risk is reduced, the government's share will be bigger," he said.

    He said the government would seek to improve the investment climate in the national upstream oil and gas industry and offer 17 other Working Areas this year.

    To note, the government received a definite investment commitment of US$14.14 million from Petronas, BP, and Mitra Multi Karya in the auction. In addition, there is also a signature bonus of US $ 1.2 million obtained by the State.

Working Area Ketapang Block Petronas 

    In detail, Petronas through PC Ketapang II Ltd. will conduct a G&G study at WK North Ketapang with a budget of US$1 million, 3D seismic covering an area of ​​300 square kilometers worth US$6.39 million, multi-client uplift fee from 3D seismic covering an area of ​​​​262 square kilometers US$750,000, and a signature bonus of US$500,000

    In WK Agung I, BP through BP Exploration Indonesia Limited will conduct a G&G study with a budget of US$500,000, 2D seismic covering an area of ​​2,000 square kilometers worth US$2 million, and a signature bonus of US$100,000. As for WK Agung II, BP through BP West Papua I Limited is ready to conduct a G&G study worth US$500,000, 2D seismic covering an area of ​​2,000 square kilometers with a value of US$1 million, and a signature bonus of US$100,000.

    Then Mitra Multi Karya will do a workover of eight wells with a budget of US$2 million, and a signature bonus of US$500,000.

    Tutuka said that the investment commitments from the three companies were a positive signal for national upstream oil and gas investment in times of challenging global conditions.

Blogger Agus Purnomo in SKK Migas

FULL SUPPORT

    Head of SKK Migas Dwi Soetjipto ensured that his party will provide full support so that the management of the North Ketapang Working Areas (WK) ​​can run smoothly until new reserves are found.

    According to him, the election of Petronas as the manager of North Ketapang shows that Indonesia's upstream oil and gas investment is still attractive to world-class investors.

“Petronas is one of the largest oil and gas companies in the world. With the additional investment in Indonesia, hopefully, this will be able to attract other world-class investors to follow Petronas' footsteps."

    Petronas Executive Vice President and Chief Executive Officer of Upstream Adif Zulkifli said his party was very happy with the results of the auction. Moreover, Working Areas (WK) North Ketapang is located close to where the company discovered oil reserves last year.

"We will continue to strengthen our upstream oil and gas business to provide value and contribute to the development of the energy industry in Indonesia. As a progressive energy and solutions partner, Petronas is committed to providing Indonesia with a safe and reliable energy supply," he said.

    Separately, BP through its official statement stated that Working Areas (WK) Agung I and II are unexplored areas. The two Working Areas (WK) with very significant gas sources are close to the increasing demand for gas.

"The addition of Agung I and Agung II Blocks to our portfolio reflects our ongoing commitment to invest and grow our business in Indonesia," said BP Regional President Asia Pacific Nader Zaki.

Bisnis Indonesia, Page-4, Monday, March 21, 2022

Strategic Nigeria-Morocco Gas Line

    The Ukraine war, which has escalated into an energy war, is not expected to contribute to the strategic value of the Nigeria-Morocco gas line project. Why is that? Europe, with 40 percent of its gas needs imported from Russia, must now immediately look for alternative gas sources after the United States and Europe maneuvered to impose sanctions on Russia after the military invasion of Ukraine.

Raja Maroko Muhammad VI

    One alternative source that is in high demand today is the Nigeria-Morocco gas line project. The Nigeria-Morocco gas line project, as reported by the Al Jazeera website, Tuesday (8/3), was launched in December 2016, when the King of Morocco, Muhammad VI, visited Abuja and met the Nigerian President Muhammadu Buhari.

Muhammadu Buhari

    At that time, Muhammad VI and Buhari agreed to conduct a study on the construction project of the Nigeria-Morocco gas line to Europe along 5,560 kilometers. The study began in May 2017. Furthermore, in June 2018, Nigeria and Morocco announced the construction of a Nigeria-Morocco gas line project to Europe which will pass through 13 countries in West Africa and North Africa. The project value reached 30 billion US dollars.

Gas line from Nigeria to Morocco

    In June 2021, the construction of the pipeline from Nigeria to Morocco began. Its construction will last 25 years. Saudi Arabia, Qatar, and the United Arab Emirates support the project and will principally invest in the project. The Jeddah-based Islamic Development Bank (IDB) on January 6 signed an agreement with Morocco and Nigeria. IDB will spend 15.45 billion US dollars for the construction of the gas pipeline.

ECOWAS

    The Nigeria-Morocco gas line megaproject will provide great benefits to the West African Region, North Africa, and Europe in the form of jobs, electricity supply in many areas of West Africa that are not yet electrified, and can help with fertilizer production. The project is considered to be strengthening the economic cooperation of the West African Economic Community (ECOWAS), which consists of 15 West African countries. The pipeline is said to pass through most of the ECOWAS member countries.

    Two Arab countries in North Africa, Morocco, and Mauritania have applied to join ECOWAS. Europe is also now paying attention to the project. Its existence is seen as part of the diversification of gas sources. So far, Europe is very dependent on Russia.

Strategic

    The outbreak of the Russo-Ukrainian war since February 24, followed by Western bloc sanctions, namely stopping European imports of Russian gas, has made the Nigeria-Morocco gas route project more strategic for Europe. Moreover, Germany has frozen the Nord Stream 2 project, namely the gas pipeline project from Russia to Europe via Germany, immediately after Russia attacked Ukraine.

the Nord Stream 2 project

    So far, the Nord Stream 2 project is the toughest rival of the Nigeria-Morocco gas pipeline project because the Nord Stream 2 project line is much shorter (about 1,230 kilometers) than the Nigeria-Morocco gas pipeline (5,560 kilometers). 

    However, Nord Stream 2's investment value is much lower so gas prices from the Nigeria-Moroccan pipeline are more expensive. However, Germany's action to freeze the Nord Stream 2 project left the Nigeria-Morocco gas line project without any more serious competitors.

    The only rival for the Nigeria-Morocco gas line will be the East Med gas route, which is a gas pipeline project in the Eastern Mediterranean Sea through Greek territory for gas exports to Europe. According to the US agency for geological studies, oil and gas reserves were found in an area of ​​83,000 square kilometers in the eastern Mediterranean Sea. 

    It is estimated that the mine has gas reserves of up to 287 trillion cubic meters and liquid oil of 1.7 billion barrels. Almost certain, path Nigeria-Moroccan gas, the East Med gas line plus gas from Qatar, can become the new backbone of gas supply to Europe, replacing Russia.

Saad Sherida-Al-Kaabi

    It is impossible to cover Europe's enormous gas demand from a single source. There must be a collaboration between several large gas sources to be able to meet the European market. Qatar's Minister of Energy Affairs, Saad Sherida-Al-Kaabi, at the summit of world gas exporters in Doha on February 22, emphasized that Qatar is willing to increase gas supplies to Europe, but on the other hand, Qatar is unable to meet Europe's gas needs alone.

    This is because Qatar has long-term contracts for gas exports with many other countries. Al-Kaabi's statement shows Qatar's need to collaborate with gas sources in other regions, such as the East Med and the Nigeria-Morocco axis. This cooperation is necessary to fulfill the European gas market.

Kompas, Page-4, Friday, March 11, 2022

Ukraine Crisis Turns Into Energy War

 

    The Ukrainian crisis, which was actually a cooperative relationship between the United States and Russia, turned into an energy war. After being subjected to a barrage of economic sanctions, Russia is now retaliating.

    The Ukrainian crisis that took place with dozens of economic sanctions from Western countries on Russia developed into an "energy war". The United States stops energy imports from Russia. In return, Russia will also retaliate for its energy exports to America and Europe.

    President of the United States (US) Joe Biden in Washington DC, Tuesday (8 March 2022) UTC time or Wednesday (9 March) West Indonesia time, announced the termination of all imports of oil, gas, and coal from Russia to his country. This he called as part of pressure for Russia to stop attacks on Ukraine. Similar moves are being planned by two UK-based oil giants, BP and Shell.

BP

“We banned all imports of Russian oil, gas, and energy. This means Russian oil is no longer welcome at US ports," Biden said.

sHell

    The move immediately responded to Russian President Vladimir Putin by banning the export and import of raw materials and a number of other goods. In Moscow, Putin issued a decree banning the export and import of raw materials to ensure the safety and sustainability of the industry in Russia. The policy is temporarily implemented until December 31, 2022.

Government and parliament

    Russia will soon decide on commodities that are on the banned list. Moscow ensures there will be no ban on private consumption. The prohibition only applies to industrial consumption. 

Alexander Novak

    Before the decree was announced, Russian Deputy Prime Minister Alexander Novak announced that Russia had the right to deliver gas to Europe. However, he said the termination would be detrimental to all parties.

    Previously, the Ukrainian crisis had raised oil prices above 100 US dollars per barrel. However, with the announcement from Washington and Moscow, world oil prices skyrocketed. The price of Brent crude oil had reached the price level of 130.38 US dollars per barrel.

    Meanwhile, West Texas Intermediate oil price reached 125.58 US dollars per barrel.

    The increase in oil prices always raises the prices of other global commodities. This is also what is currently happening. For example, nickel and tin are widely owned by Indonesia the price rose more than 4 percent. The metal price increase was also noted in palladium, very important in the semiconductor industry. As much as 40 percent of the world's supply comes from Russia.

Fatih Birol

    Oil prices were discussed at an energy conference in Paris. Executive Director of the Energy Agency (IEA) Fatih Birol said the IEA could release more international sugar oil stocks creating fuel prices. The IEA represents 31 industrialized countries. Russia is not included.

    The Executive Director of the Reforminer Institute, Komaidi Notonegoro, said the increase in oil prices would further depress the balance of the national oil and gas trade. This is because Indonesia is an importer of clean oil and national energy consumption for oil and gas reaches 51 percent. 

    In the end, the oil and gas trade balance deficit will get bigger. In fact, additional foreign exchange earnings from rising commodity prices. Komaidi is worried that he will not be able to cover the need for additional foreign exchange to finance oil and gas imports.

    As an illustration, the need for foreign exchange for imports of oil and gas can reach around 49.27 billion US dollars assuming an oil price of 120 US dollars per barrel. The needs consist of imports of oil and fuel products worth 44.04 billion US dollars and LPG imports worth 5.23 billion US dollars.

"With such an illustration, foreign exchange needs for oil and gas imports could reach almost 35 percent of Indonesia's current foreign exchange reserves, which are recorded at around US$ 141 billion," he said.

    In fiscal matters, Komaidi is of the opinion that every increase in the oil price of 1 US dollar per barrel will increase oil and gas revenues in the 2022 State Budget (APBN) by around Rp. 3 trillion. However, when the price of oil increases, it will also increase the need for additional subsidies and compensation for oil and gas in larger amounts.

    Furthermore, he added, rising prices triggered by geopolitical conflicts and wars now confirm that even in a transition era, energy, security of oil and gas supply are major issues that cannot be ignored.

    Separately, the Institute for Essential Service Reform (IESR) Transformation Program Manager, Deon Arinaldo, said that when gas supplies from Russia were hampered, European countries would start thinking about not focusing on energy commodities. Indonesia can make an energy transition. However, the challenge for Indonesia is to attract new and renewable energy investments into the country.

“There are many business/industry players who are willing to invest in renewable energy, they just need how the government can facilitate it. It is time for the energy transition to be seen as a strategy for development and economic growth," he said.

Kompas, Page-1, Thursday, March 10, 2022