Petronas Interested in Working on the Masela Block

    The Special Task Force for Upstream Oil and Gas Activities (SKK Migas) stated that a Malaysian oil and gas company, Petronas, expressed interest in working on the Masela Block, replacing Shell, which had left the largest gas project in Indonesia.

Petronas

    Petronas is also interested in entering into cooperation with Pertamina in terms of replacing Shell if possible. This is the latest development regarding Shell," said Head of SKK Migas Dwi Soetjipto in a hearing with Commission VII.

The Masela Block

    Apart from Petronas, previously there were two companies that were known to be interested in replacing Shell in acquiring a 35% stake in the Masela Block, namely Pertamina and ExxonMobil. Dwi said Pertamina had opened the Masela Block data room this November. It is hoped that Pertamina can submit a Non-Binding Offer to Shell.

ExxonMobil

    The government is targeting that discussions on the acquisition of Shell's participating interest (PI) in the Masela Block by Pertamina can be completed this year. One of the main conditions for reaching an agreement is the certainty of PI's acquisition value. According to Dwi, Pertamina must find an agreement with Shell to get into the Masela project.

Shell

    According to Dwi, Shell already has a minimum value base that must be prepared by Pertamina. This value is the total funds that have been spent by the company while being Inpex's partner in Masela.

Blogger Agus Purnomo in SKK Migas

"Pertamina is negotiating with Shell. SKK Migas monitors and provides direction so that Shell sells at moderate prices. To keep the project going. We wrote to Shell to support the divestment. Around US$1.4 billion has been spent by Shell," Dwi said.

Inpex Corporation

    Meanwhile, for Pertamina, there is ExxonMobil which was also offered by Inpex to conduct the study. SKK Migas said Dwi hopes that there will be opportunities for cooperation between Pertamina and ExxonMobil to open again, instead of the scent of competition. However, it all comes back to the management of each company whether to continue the collaboration as it has been in the Cepu block.

"If all this time ExxonMobil is also conducting studies, it could be a potential collaboration with Pertamina. But we'll see now that each study has its results, whether we want to continue or not," said Dwi.

IDD Project

    Meanwhile, Dwi also stated that the Indonesia Deepwater Development (IDD) project is expected to start running in early 2023, due to the certainty that the replacement operator for PT Chevron Pacific Indonesia will be completed by the end of this year.

Chevron

“Chevron has decided to leave the IDD project. Now there is a potential replacement. IDD could run next year," said Dwi.

ENI

    According to information, an Italian oil and gas company, ENI, is rumored to be controlling 62% of Chevron Pacific Indonesia's (CPI) participating interest in the Indonesia Deepwater Development (IDD) Gas Project. The IDD project has the potential to produce up to 844 million standard cubic feet of gas per day (MMscfd) and 27,000 barrels of oil per day (BOPD). The plan is for the project to be targeted onstream in the fourth quarter of 2027.

Investor Daily, Page-4, Thursday, Nov 17, 2022

PGN and Turkiye SOE BOTAS Establish LNG Business

    PT Perusahaan Gas Negara Tbk (PGN) is collaborating with Turkish State-Owned Enterprise (SOE), and BOTAS to work on opportunities in natural gas, and Liquified Natural Gas (LNG).

    PGN President Director M. Haryo Yunianto explained that PGN's cooperation with Botas is not limited to the supply of natural gas and LNG, but also includes the development of hydrogen cooperation, LNG infrastructure, LNG trading, underground gas storage facilities, HR development, and another business potential. 

BOTAS

    Indonesia and Turkey can become essential energy markets for the sustainability of bilateral energy trading, especially natural gas. To support cooperation, PGN and BOTAS continue to coordinate regarding infrastructure readiness such as FSRU and LNG terminals, said Haryo in a press release.

    According to Haryo, diversification of natural gas supply routes and sources is important for the certainty of natural gas and LNG supplies. Therefore, the distribution of natural gas and LNG for Turkiye will also come from other sources, not only from Indonesia.

    Currently, the Arun LNG Hub is operating, which is managed by PT Perta Arun Gas (PAG) as an affiliate of Subholding Gas. Arun's strategic location makes it an Asian LNG trading center and Global LNG Hub destination such as China, Australia, Angola, Egypt, and the United States.

    PAG's main business is the LNG receiving terminal, regasification, and LNG Hub. Strategic location near the Malacca Strait with the potential for nearly 100,000 ships to sail through, making it an important capital for PAG as a world-class LNG Hub center. Its operation is fully supported by the government through the appointment of PAG, explained Haryo.

    Haryo continued, and this collaboration is expected to continue to the commercial stage. Later, it is believed that PGN will benefit from further expanding its business to the international arena. On the other hand, Turkey can be assisted in fulfilling natural gas energy in big cities and industrial centers as consumers of natural gas in large quantities.

Kontan, Page-12, Wednesday, Nov 16, 2022

Petronas Becomes Pertamina's New Competitor in the Masela Block

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) said that a new competitor in the takeover of Shell Upstream Overseas Ltd.'s 35% stake has decided to leave the Masela Block.

Petronas

    The presence of Petronas has increased the number of potential investors in the Masela Block. Because, previously, Pertamina-INA-Medco and ExxonMobil were reportedly interested in taking over Shell shares. Deputy Head of SKK Migas Fatar Yani Abdurrahman revealed that Petronas has just expressed its interest in replacing Shell in the Masela Block.

the Masela Block

"After someone made an offer, Petronas was interested in joining, but we are currently studying it. We will discuss this," said Fatar.

    Currently, Petronas is only waiting for the government's commitment. However, SKK Migas cannot confirm whether Petronas will enter with partners or alone. What is certain, "Petronas has expressed its interest in investing in this LNG project with a capacity of 9.5 million tons per year," said Fajar.

Blogger Agus Purnomo in SKK Migas

    SKK Migas previously targeted Pertamina to submit an offer to Shell for the acquisition of a 35% stake in the Masela Block this November.

    Until now, the filing of this interest has not been carried out. Pertamina's consortium is currently still being evaluated with various options.

    Potential replacement investors for Shell in the Masela Block must invest around US$ 1.4 billion if they are interested in taking over shell shares. The amount of this investment does not include the funding requirement of US$ 6.3 billion for the first five years of development as capital expenditure.

    In addition, with the addition of the Carbon Capture Utilization & Storage (CCUS) project to the Masela project, there is a potential for additional investment of around US$ 1.2 billion to US$ 1.4 billion.

    Fatar emphasized that learning from Shell's release in the Masela Project, SKK Migas is prepared to strengthen the existing provisions in the future oil and gas block Plan of Development (PoD).

sHell

    Fatar revealed that SKK Migas felt like it had been lied to by Shell leaving the Masela Block. Moreover, "When the POD, we provide incentives, but the conditions are poor. For example, until the commercial production is not allowed to leave the Masela Block," said Fatar.

    The Masela Block project is the first very large-scale project in Indonesia. This also makes the government happy. But unfortunately in the terms and conditions of the contract, there is no protection for the project so that investors don't just run away.

    So, in the future, SKK Migas is targeting regulations to provide protection so that investors do not leave the project until the commercial production stage. This provision applies to projects that receive incentives. As a result of Shell's escape, the construction and development of the Masela Block was delayed. Moreover, the release of management shares or Shell's participating interest requires approximately 18 months for a 35% stake in the Masela Block.

Kontan, Page-12, Wednesday, Nov 16, 2022

Pertamina Collaborates with ADNOC Companies to Work on EBT Projects

    Pertamina cooperates with two companies from the United Arab Emirates (UAE) to develop energy potential and refinery production in Indonesia, namely Masdar which is a leading renewable energy company, and Abu Dhabi National Oil Company (ADNOC).

ADNOC

    This commitment was announced in the presence of President Joko Widodo and President of the United Arab Emirates Mohammed bin Zayed Al Nahyan, during the peak of Business 20 (B20) activities in Nusa Dua, Bali, Monday (Nov 14).

President of the UEA Mohammed bin Zayed Al Nahyan 

with President Joko Widodo 

    The signing of the cooperation commitment was carried out previously some time ago in the UAE. The collaboration between Pertamina through Pertamina Power and New Renewable Energy (PNRE) with Masdar is the development of a Solar Power Plant (PLTS) in the Rokan Block with a cooperation agreement period of 2 years, starting November 12 2022 to 2024. PNRE and Masdar will work together to provide reliable and competitive solutions in the Rokan Phase 2 and Phase 3 PLTS development at the Rokan WK.

Nicke Widyawati

"This strategic collaboration between Pertamina NRE and Masdar will have the potential to accelerate the energy transition," said Pertamina Main Director Nicke Widyawati.

    PLTS Rokan Phase-2 is currently under study with a potential capacity of up to 50-MWp with an estimated total investment value of US$ 47 million. Meanwhile, PLTS

    Rokan Phase-3 with a potential capacity of up to 150 MWp with an estimated total investment value of US$ 140 million. This collaboration does not rule out opportunities for the development of other PLTS within Pertamina.

    Pertamina Power Indonesia (PPI) as the PNRE operator will form a joint venture with Masdar with the composition of ownership in the cooperation, namely PPI as much as 55% and Masdar as 45%. Meanwhile, the off-taker for Solar PV is PT Pertamina Hulu Rokan (PHR) with the benefit of cost savings, a reduction in CO2 footprint of up to 184,000 tons per year, and a reduction in gas consumption of up to 2816 MMSCF per year.

    In addition, PPI and Masdar also exchanged documents related to the Memorandum of Understanding for the Development of Renewable Energy Projects in Indonesia. These projects include developing new Renewable Energy (EBT) projects and sharing information for evaluating and analyzing project feasibility.

Masdar Mubdala Company

    Not only with Masdar, but Pertamina is also collaborating with ADNOC regarding the potential for cooperation in the production of Polyolefins in Indonesia. The agreement period is 1 year (12 November 2022 – 2023). 

    While the potential areas of cooperation are exploring opportunities for participation in cracker projects & new derivatives of the PT Kilang Pertamina International (KPI) Polyolefin project in Indonesia, where ADNOC is interested in utilizing ADNOC technology for Polyolefins, the potential for marketing Polyolefin products by ADNOC and supplying feedstock such as naphtha, LPG and Propane.

Transition Process

    Previously in the discussion session, Nicke also revealed that the energy transition process cannot be achieved in a short time. Requires various kinds of technology, costs, and human resources that are able to meet the standards of meeting the needs of renewable energy. 

    Meanwhile, when the transition process occurs the demand for energy needs also increases, so large-scale energy security must still be maintained. Nicke explained various strategies to face the challenge of alignment between transitions and energy needs.

    To achieve Net Zero Emission (NZE) aspirations while maintaining energy security in Indonesia, PT Pertamina has developed a comprehensive strategy that is delivered through two main pillars and 3 intermediate implementations. The first two main pillars are to focus on decarbonizing business activities, and the second is the development of a green mixed energy business.

    Then, three medium-term strategies that support the plan to drive Net Zero Emissions are first to develop carbon accounting standards that meet national and international standards. The second is stakeholder engagement to fully support the national NZE targets and commitments. This goal is supported by Pertamina's long-term investment strategy.

    The third is Pertamina's environmentally friendly sustainability business initiative which will focus on Biofuels, renewable energy sources, Carbon Capture Systems (CCS/CCUS), batteries as well as electric cars, hydrogen, and carbon businesses. Pertamina has also developed a strategy to support the energy transition by allocating capital costs (CAPEX) for low-emission energy and EBT development.

"We have set a goal to increase the Green Business portion in Pertamina's revenue mix from 5 percent in 2022 to 13 percent in 2030," said Nicke.

    Predictably, revenues from fossil fuels are expected to decline significantly from 86 percent in 2022 to 66 percent in 2040. The objective of this optimistic capital allocation has been coordinated with the Indonesian government and ensured that it is aligned with Indonesia's energy mix targets for renewable energy.

    To offset financing, Pertamina has also implemented a long-term investment strategy consisting of 14 percent Capex for green energy business actions. In addition, Pertamina continues to invest in fossil fuels and petrochemicals as its current main business, in an effort to ensure that the energy transition will not interfere with energy security.

    In addition to the capital investment strategy, Pertamina also collaborates with various parties to accelerate target achievement. Collaboration is needed, in facing the same challenges during the energy transition, especially in technology and financing.

“The cost of technology is still higher than fossil fuels. That's why, we are open to partnerships and collaborations, to drive innovation and lower technology costs, "explained Nicke.

    Collaborative efforts are being intensified because currently the use of technology in new, renewable energy still requires high costs, so the selling price to consumers is still very high. In reducing these operational costs, financing issues are expected to attract more inward investment, both international and domestic, in order to improve global financing mechanisms to support energy transition and decarbonization projects.

 Investor Daily, Page-10, Wednesday, Nov 16, 2022

Pertamina Invites ADNOC Companies to Invest in Indonesia

    PT Pertamina (Persero) is working with two companies from the United Arab Emirates (UAE) to develop new and renewable energy potential, as well as domestic refinery production.

ADNOC

    In the series of B20 Summit activities, Pertamina signed a partnership with the Abu Dhabi National Oil Company (ADNOC) and Masdar a company that focuses on developing renewable energy. 

Masdar Mubdala Company

    With Masdar, Pertamina through Pertamina Power and New Renewable Energy (PNRE) will develop a solar power plant or PLTS in the Rokan Block with a cooperation agreement period of 2 years starting November 12, 2022.

Nicke Widyawati

    The Main Director of Pertamina Nicke Widyawati said that PNRE and Masdar would work together to provide reliable and competitive solutions in the development of PLTS Rokan Phase 2 and Phase 3.

"This strategic collaboration between Pertamina NRE and Masdar will potentially accelerate the energy transition," said Nicke Widyawati.

    PLTS Rokan Phase 2 is currently under study with a potential capacity of up to 50-megawatt peak (MWp) with an estimated investment value of US$47 million. Meanwhile, PLTS Rokan Phase 3 with a potential capacity of 150 MWp has an estimated investment value of US$140 million.

    Later, Pertamina Power Indonesia as the PNRE operator will form a joint venture company with Masdar. The plan is for Pertamina Power Indonesia (PPI) to own 55% of the joint venture, and Masdar to control the remaining 45%.

As for ADNOC, Pertamina will work on cooperation in the production of Polyolefins in Indonesia for 1 year from 12 November 2022. In addition, ADNOC will also explore opportunities for participation in cracker projects and new derivatives from the PT Kilang Pertamina International (KPI) Polyolefin project in Indonesia, because the UAE company is interested in bringing its technology to Indonesia.

Bisnis Indonesia, Page-4, Wednesday, Nov 16, 2022

Pertamina Hulu Mahakam (PHM) Increases Well Drilling

    PT. Pertamina Hulu Mahakam (PHM) targets to be able to drill 95 development wells and one exploration well to maintain the rate of natural production decline in a number of old fields managed by PHM.

    General Manager of Pertamina Hulu Mahakam (PHM) Krisna said that his party was implementing a number of innovations and technological applications to increase the recovery rate of oil and gas wells in the area.

"We continue to try to contain the rate of natural production decline by applying the best engineering practices in production operations, drilling, well intervention or well connection, maintenance or inspection works," he said.

    Krishna added that this strategic step was taken to meet the 2022 WP&B target given by SKK Migas with the achievement of natural gas production of 550 MMSCFD, and 19.5 Kbbld of oil.

“PHM plans to drill 95 exploitation development wells and 1 exploration well. We also succeeded in realizing 24 wells in the first quarter of this year. This drilling target is expected to be able to increase the additional annual average production in 2022," said Krishna.

    The increase in PHM production is the contribution of the Jumelai, North Sisi, North Nubi Project which is on stream on May 20, 2022. Gas production from the project is estimated to reach 45 MMSCFD and 710 barrels of condensate per day.

    Krishna said the enormous production from the Jumelai Field is one of the supports for the current national oil and gas needs, as well as driving upstream oil and gas operations and investment activities.

    President Director of PT Pertamina Hulu Indonesia (PHI) Chalid Said Salim said the increase in PHM production was supported by the successful planning and implementation of the installation rejuvenation program carried out from May to June 2022.

"The upgraded installation inspection and rejuvenation program enables the continuous start-up of Sisi Nubi's new wells, thereby contributing significantly to the achievement of gas wellhead flow rates above 550 MMSCFD," he said.

Bisnis Indonesia, Page-4, Tuesday, Nov 8, 2022.