Strong Momentum to Stimulate Investment

    The warming of world oil prices in recent weeks is believed to be able to increase the enthusiasm of the oil and gas industry in the country, which had dimmed due to the Covid-19 pandemic.

Blogger Agus Purnomo in SKK Migas

    Head of Program and Communication Division of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Susana Kurniasih said the increase in oil prices would improve the domestic investment climate.

"SKK Migas continues to coordinate with KKKS to support investment realization," Susana Kurniasih said.

    She continued that the upstream oil and gas industry has a high risk so that every project activity is carried out based on predictions of sufficient oil prices.

    According to her, although oil prices have crawled up until now Indonesia's upstream oil and gas work plan is still running in accordance with the 2021 work program & budget (WP&B).

"If there are KKKS on the way to add investment activities even though they are not in the WP&B that year, SKK Migas will facilitate it," She said.

    Based on the 2021 WP&B, the G&G study is targeted at 116 activities. The 2D seismic survey is targeted to be 4,569 kilometers (km), while the 3D seismic survey is targeted to be carried out along 1,549 km.

    Meanwhile, exploration well drilling is targeted at 48 wells, and development well drilling is targeted at 616 wells. Workover activities throughout this year will be carried out as many as 615 wells and followed by well service activities as many as 26,431 activities.

    Susana said that until May 2021, domestic upstream oil and gas investment is still running according to the target and there has been no increase.

"The realization is at US$3.11 billion, still on the track," She explained.

NOT SIGNIFICANT

    Meanwhile, the founder of the Reforminer Institute, Pri Agung Rakhmanto, said that basically, the scale for the amount of investment from upstream oil and gas actors in the country is limited, namely that the majority of the investment disbursed is only about maintaining existing production.

    The unfriendly upstream oil and gas investment climate in Indonesia has made investors reluctant to disburse their funds to start new upstream oil and gas projects in Indonesia.

"The investment surge will only exist if for example there is a large-scale exploration or a large-scale project. If there is nothing new and the scale is not large, it is only about maintaining the lifting level, so it will dwell on the current figures," he told Business.

    The Executive Director of Energy Watch Mamit assessed that investors are still waiting for developments from the movement of world oil prices to a stable position. According to him, investors still believe that the increase in oil prices is temporary.

    Global economic growth with the current vaccination program is still not optimal. A large number of second and third waves of Covid-19 in several countries with high energy consumption is one of the causes.

"In addition, national economic conditions have not yet grown and there are still domestic restrictions that affect investors more or less. The licensing process, procurement of goods, transportation is still not optimal because this pandemic affects activities in our upstream oil and gas sector," he explained.

BP Indonesia

    Meanwhile, the government's efforts to boost oil and gas investment are actually starting to bear fruit. One of them is from BP Indonesia which increased its investment value by US$4 billion to increase Tangguh reserves in Papua.

    Head of SKK Migas Dwi Soetjipto said BP management said it would increase investment in Indonesia through development in the Ubadari Field and carbon capture, utilization, and storage (CCUS).

"We welcome it because it means that the efforts made by SKK Migas and the government to increase investment are paying off," he explained.

    Dwi hopes that BP's steps to increase this investment will soon be followed by other contractors, especially since world oil prices will continue to improve.

"The situation of world oil prices recovering faster, even exceeding the average world oil price in 2019, is expected to encourage KKKS to increase exploration activities outside the program agreed in the 2021 work program and budget," he said.

Bisnis Indonesia, Page-4, Wednesday, May 19, 2021

Caring for Production Increase expectations

 

    The national fuel consumption which is projected to continue to increase makes the target of oil production of 1 million barrels per day and gas of 12,000 MMscfd in 2030 to be crucial at a time when Indonesia's efforts to build energy independence.

    Meanwhile, Indonesia is still the country with the largest oil imports in Southeast Asia due to the increasing domestic consumption of oil and gas without a significant increase in production.

    In the last 2 decades, the discovery of new oil reserves has been classified as minimal and Indonesia still relies on old wells that have not been explored. As a result, the government must import oil and gas to meet domestic energy needs, which often creates a trade balance deficit.

    In the next 10 years, petroleum consumption in Indonesia is projected at 2.27 million barrels per day (BPD) and natural gas consumption of around 11,728 MMscfd. This number has almost doubled compared to last year's consumption of around 1.66 million BPD of oil and 6,557 MMscfd of gas.

    On the other hand, the government's efforts to increase oil production to 1 million BPD and gas to 12,000 MMscfd are still fraught with a number of challenges. One of them is the Covid-19 pandemic which has had a negative impact on the upstream oil and gas industry.

Blogger Agus Purnomo in SKK Migas

    Secretary of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Taslim Z. Yunus said Indonesia's upstream oil and gas industry was influenced by global conditions caused by the level of control of the Covid-19 pandemic, fluctuations in world oil prices, and global investment trends.

    According to him, a tough challenge for the upstream oil and gas industry is the massive impact of Covid-19 which has caused oil prices to fall. As a result, production has also decreased, because oil and gas companies tend to reduce their investment.

    Last year, a number of international oil and gas companies that cut their investment were ExxonMobil by 30%, Shell by 20%, Chevron 20%, BP 25%, and Eni 255.

"What they need is to compete with other countries from the IRR, then the future trend is to look at environmentally friendly energy because from a social point of view it will be easier," he said.

    Meanwhile, SKK Migas has prepared four strategies to increase national oil and gas production as well as towards the 2030 production target, namely by optimizing production in existing fields, transforming resources into production, accelerating chemical Enhanced Oil Recovery (EOR), and exploring major discoveries.

    The long-term strategy will go through two stages to curb the rate of decline in production and increase production.

"The first and second strategies are to hold down the rate of production, while the increase in production will result from the EOR and exploration strategies," he explained.

    Head of SKK Migas Dwi Soetjipto added that investment needs will continue to increase for the next 10 years in order to pursue the oil production target of 1 million BPD and gas of 12,000 MMscfd. The investment is set at the US $ 187 billion.

    Dwi said that besides being attractive to investors, the target could provide a multiplier effect in the form of the gross revenue of US $ 371 billion with state revenues of US $ 131 billion in 2030. In addition, with money circulating from upstream oil and gas projects and open job opportunities, it will have an impact. both for the national and regional economies.

    Nevertheless, there are several challenges that need to be resolved domestically, namely the complexity of licensing, overlapping regulations between the central and regional governments, an unattractive fiscal regime, data unavailability, constraints in the area of ​​operation, land acquisition constraints, the longer oil and gas monetization process. and fear of making decisions, in this case, the criminalization of policies.

    Meanwhile, Ronald Gunawan, President Director of PT Medco E&P Indonesia, said 2020 was a difficult year for the upstream oil and gas industry. The Covid-19 pandemic has suppressed the performance of cooperation contract contractors (KKKS).

    According to him, the world oil price dropped drastically in the last year and followed by low natural gas prices made the upstream oil and gas sector languish. However, with efforts escorted by the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), operational activities can continue in the midst of a pandemic.

"SKK Migas support is very good. Hence, the operations of the KKKS are a little disrupted but not significant, ”he said.

Ronald said the vision to pursue the oil production target of 1 million BPD and 12,000 MMscfd of gas by 2030 has become a joint commitment of the government, SKK Migas, and KKKS.

    Meanwhile, since 2015 Medco has continued to increase its oil and gas production levels from the range of 56,000 barrels of oil equivalent per day (Mboepd) to reach the level of 100,000 Mboepd in 2020.

    According to him, the Covid-19 pandemic provides new lessons for running operations more efficiently. With a 20% reduction in capital expenditure or capital expenditure, Medco is still able to record an increase in production amid the pandemic.

INCENTIVE

    An energy observer who once served as Governor of Indonesia for OPEC, Widhyawan Prawiraatmadja, said that there needs to be an incentive provided by the government to be able to pursue the target of increasing oil and gas production.

    He said that it is possible to increase oil and gas production again in Indonesia. He gave an example that other countries, such as the United States and Mexico, had successfully implemented reliable technology, improved fiscal policy, and improved the business climate in an integrated manner.

"We have to do something drastic, the fiscal term must be the same as in other places. "The higher the spend, the higher the chances of getting the giant, this has been proven in Mexico," he said.

    Meanwhile, a Member of the National Energy Council, Satya Widya Yudha, said that in the context of energy security, the government needs to pay attention to affordability.

    Therefore, fossil energy will still be very dominant in the future, but still paying attention to environmental factors that will be supported by technology.

"So if our renewable energy is still less affordable, as a whole people will go to fossils, the world will go to fossils," he said.

Bisnis Indonesia, Page-4, Thursday, April 29, 2021.

Pandemic Effects Of The Upper Oil and Gas Load

 

The national oil and gas industry is not yet optimally producing significant results in the first quarter of 2021. The realization of ready-to-sell production is still below the target.

Blogger Agus Purnomo in SKK Migas

Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said the realization of ready-to-sell production or oil and gas lifting during the first quarter of 2021 was 1,665.25 Mboepd or 97.3% of this year's APBN target of 1,711.78 Mboepd.

In detail, the realization of oil lifting in the first quarter of 2021 was recorded at 676,200 barrels per day (BOPD), or only 96% of this year's APBN target of 705,000 BOPD. Likewise, the realization of natural gas lifting in the first quarter of 2021 was 5,539 MMScfd, or 98.2% of the APBN target of 5,638 MMscfd.

“From the oil side, the entry point at the end of 2020 is very low. At that time it was 699 MBOPD and because there was a decrease in investment, the level of production was not appropriate. That is one of the factors affecting the performance that was not achieved in the first quarter of 2021, "he said.

Exxon Mobil Cepu Ltd. (EMCL)

Dwi added that oil and condensate production missed plans in several fields. For example in the Banyu Urip field by Exxon Mobil Cepu Ltd. (EMCL) which experienced an increase in water cut and also in the Sukowati Tuban field in East Java by PT Pertamina EP. Dwi said Exxon Mobil Cepu (EMCL) and Pertamina EP contributed to the shortfall in the national lifting target of 10,000 bopd each.

BP

In addition, there has been a decline in the contribution of drilling several wells, namely Pertamina Hulu East Kalimantan and Minarak Brantas Gas. This condition was exacerbated by the unplanned shutdown in the first quarter of 2021 at Train-1 and Train 2 at BP Berau, CPGL Suban Plant, and at BGP Petrochina Jabung.

Petrochina

"We are trying to calculate, the year-end outlook will not reach 705,000 bopd, but we are trying to make a strategy for no decline in 2021. We can get closer as possible," Dwi said.

Pertamina EP

Meanwhile, the failure to achieve the realization of natural gas lifting was also partly due to the inability to achieve Pertamina EP production. In addition, there are differences in assumptions related to the completion of the Tangguh Train-3 project.

Dwi said that the Tangguh Train-3 project is assumed to be completed at the beginning of this year under these assumptions. But in reality, the project is declared to be shifted until the end of 2021 and there is a possibility that it will be completed next year.

Meanwhile, the organizational reshuffle that has taken place within the PT Pertamina (Persero) group is considered to be one of the causes for the low-performance achievement of this state-owned company in the upstream oil and gas sector. According to Dwi, this is a natural fit when there is an overhaul of the organizational structure. The reason is that the investment has not been able to take place smoothly.

“Subholding is a cause and a process. That usually happens, but Pertamina has carried out harmonization, "he said.

Based on SKK Migas data, in the first quarter of 2021, the Pertamina group cooperation contract contractors (KKKS) that did not meet the APBN oil lifting target included Pertamina EP which only reached 98.8% of the target, Pertamina Hulu Energi Oses 89% of the target, and Pertamina Hulu East Kalimantan 83.6%. Meanwhile, for the realization of natural gas lifting, only Pertamina EP did not reach the target of the Pertamina group with a realization of 99.8% of the target.

Dwi said SKK Migas has communicated directly with both the parent and the upstream sub-holding Pertamina regarding the investment process in the upstream oil and gas sector. SKK Migas has asked the state-owned company to speed up its investment process.

"In the last meeting, it has been announced that starting this month, the issue of waiting for FID is no longer allowed and it has been implemented. Pertamina has determined and raised the investment limit that can be made in the subsidiary, "he explained. Pertamina has stated that it is ready to increase its investment to increase operational performance by up to 20% this year.

Pertamina's Senior Vice President for Corporate Communications & Investor Relations Agus Suprijanto said that to achieve this target, Pertamina has set a Capital Expenditure / Capex budget of US $ 10.7 billion in 2021, a drastic increase from last year's CAPEX realization prognosis of US $ 4.7 billion.

Agus explained that from the total CAPEX, as much as 46% will be allocated for upstream oil and gas activities as an effort to ensure an increase in production and oil and gas reserves. The addition of oil and gas reserves is targeted to reach 696 MMboe or nearly four times the target of adding reserves last year.

Meanwhile, 36% of the CAPEX will be allocated to continue the development of refineries and petrochemicals, while the remaining 18% will be used for other business activities, including continuing the development of new and renewable energy.

"The budget shows Pertamina's high optimism to continue to grow and rise amid the Covid-19 pandemic by continuing the projects or business development that had been going on since the previous year and at the same time creating new initiative programs," said Agus.

OLD FIELD

Reforminer Institute founder Pri Agung Rakhmanto argues that lifting is difficult to reach the target because KKKS still continues to rely on old fields, leading to a downward trend.

According to him, the characteristics of the field in addition to the cost per barrel tend to increase and are difficult to predict technically in terms of production operations.

"This is the main technical reason why lifting often does not reach the target. From year to year, we will always struggle with this problem when talking about lifting achievements with the existing fields, "he said.

In connection with the low production of the Pertamina group, Pri Agung assessed that the main cause was not from overhauling the organizational structure through the formation of sub-holding.

"In my opinion, it has nothing to do with the holding sub-holding issue. Lifting is more on short-term managerial issues and operational technical matters, ”he explained.

Executive Director of the National Oil and Gas Companies Association (Aspermigas) Moshe Rizal said that almost all fields in Indonesia have reached their peak production period. So, it is natural for lifting to fall.

Therefore, it needs interventions such as the development of new fields or exploration. In addition, an enhanced oil recovery (EOR) program can be carried out for fields that have entered the secondary or tertiary production phase.

"The problem is that most fields have not prepared the EOR program from an early age so that the development of the EOR program is very expensive and often no longer goes into the field economy," he said.

He added that the low realization of national lifting was also caused by the attitude of investors who are still waiting for the situation to handle Covid-19. Even though the oil price has been very stable above $ 60 per barrel, the situation is still full of uncertainty.

"Investors will focus their investment in areas with lower risk, for example, fields that are already producing and still reduce exploration first," he explained.

Bisnis Indonesia, Page-4, Tuesday, April 27, 2021

To Boost Oil and Gas Reserves, BP Adds Investment of US $ 4 Billion

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that BP Indonesia will increase its investment by the US $ 4 billion. One of these funds will be used to increase the oil and gas reserves of the Tangguh Liquefied Natural Gas / LNG) project.

Blogger Agus Purnomo in SKK Migas

    Head of SKK Migas Dwi Soetjipto said BP conveyed this additional investment plan when meeting SKK Migas management last week. BP plans to develop the Ubadari Field in the Tangguh LNG Project and work on the Carbon Capture, Utilization, and Storage (CCUS) Project.

BP

"We are happy because it means that the efforts made by SKK Migas and the government to increase investment have yielded results," he said.

    He explained that the Ubadari Field development was intended to increase the proven reserves of the Tangguh LNG Project. Gas production from this field will then be used to support the operations of the Tangguh Train 1, 2, and 3 LNG Train. If this additional gas production is realized, BP can expand its LNG market.

"The Ubadari field was discovered in 1997, and exploration drilling began in 2017," said Dwi.

    According to him, BP will also work on the CCUS project at Tangguh. CCUS is a technology that can capture carbon dioxide (CO2) which is released into the atmosphere so that it can reduce carbon emissions. The implementation of CCUS in the Tangguh Project will support Indonesia's efforts to reduce carbon emissions by 29% to 41% by 2030 under the Paris Agreement. Implementing CCUS will cut carbon emissions by around 45%.

the Tangguh Project Papua

"Apart from making a major contribution to the government's commitment to protecting the environment, [CCUS Project] will also increase production. Another advantage, this activity will also keep the Tangguh LNG Plant competitive, especially in dealing with buyer countries that are sensitive to environmental issues, "Dwi explained.

    To realize the investment plan, BP will immediately discuss with his party the technical and economic issues of the project. This discussion is expected to immediately agree on the preparation of the second Plan of Development / POD which will be used as the basis for the Ubadari Fieldwork.

    Dwi hopes that BP's steps to increase this investment will soon be followed by other contractors. Moreover, entering March 2021, world oil prices will improve at the level of US $ 60-70 per barrel. The increase in global oil prices was faster than analysts had predicted.

"The world oil price situation is recovering faster and in March 2021 it has even exceeded the average world oil price in 2019, it is hoped that this will encourage KKKS (cooperation contract contractors) to increase exploration activities outside of the agreed program in the work plan and budget ( work, program, and budget / WP & B) 2021, "said Dwi.

    Currently, BP is also working on Train-3 at the Tangguh LNG Plant, worth US $ 8.9 billion. Referring to SKK Migas data, up to the third quarter of last year, work on the project's onshore facilities had reached 88.27% and offshore facilities 98.27%. 

    The Tangguh Train-3 project is targeted to start operating in the last quarter of this year with an estimated peak gas production of 700 million standard cubic feet per day / MMscfd and 3 thousand barrels of oil per day (BPD). The completion of Train-3 will increase the capacity of the Tangguh LNG Plant to 11.4 million tons per year.

    Last year, BP managed to record gas production of 1,074 MMscfd and is targeted to increase to 1,200 MMscfd this year. BP holds a 37.16% stake in the Tangguh Project. Other Tangguh contract partners are MI Berau B.V. (16.30%), CNOOC Muturi Ltd. (13.90%), Nippon Oil Exploration (Berau), Ltd. (12.23%), KG Berau / KG Wiriagar (10.00%), Indonesia Natural Gas Resources Muturi Inc. (7.35%), and Talisman Wiriagar Overseas Ltd. (3.06%).

Investor Daily, Page-10, Monday,  March 22, 2021

Tangguh LNG Operators are 85% from Papua

 

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif reiterated the Government's commitment that in 2029, as many as 85% of the operator workforce at Tangguh LNG will come from Papua. This was conveyed by the Minister of Energy and Mineral Resources while attending the Graduation Ceremony of the BP Berau Papuan Technician Apprentice Program, which was held virtually.

BP

    Arifin also expressed his appreciation to the Cooperation Contract Contractor (KKKS) BP Berau for the dedication given to carrying out the apprenticeship program, especially for these children from West Papua.

"It is hoped that the graduates will succeed in becoming part of the Tangguh LNG operation so that it will have an impact on the welfare of the family and also the communities around Tangguh LNG operations in particular and the people of West Papua in general," said Arifin.

Blogger Agus Purnomo in SKK Migas

    Also attending the event were Director General of Oil and Gas Tutuka Ariadji, Deputy Head of SKK Migas Fatar Yani, Deputy Governor of West Papua Mohamad Lakotani, Regent of Teluk Bintuni Petrus Kasihiw, and BP Regional President of Asia Pacific Nader Zaki. 

    With the increasing number of domestic children taking part in the oil and gas industry, the Minister hopes that it can have a real impact on improving the performance of the local oil and gas industry.

    Since this apprenticeship program began in 2016, to date, 71 participants have completed the apprenticeship program, of which 68 have worked at Tangguh LNG. The graduates in this third period have gone through a three-year training period. The knowledge and skills learned are not only beneficial in operating the Tangguh LNG plant, but also for various refineries in Indonesia and abroad.

"Through a three-year apprenticeship program, I hope that the participants will be able to meet the high standards required of a professional in the oil and gas industry," he added.

    The Minister of Energy and Mineral Resources also asked the graduates not to become complacent. On the other hand, they must continue to improve their respective abilities so that one day they will not only become operators but also become one of the leadership ranks or even become experts in various domestic and foreign oil and gas companies.

Investor Daily, Page-9, Thursday,  March 18, 2021

Pertamina Remains Resilient

 

    PT Pertamina (Persero) became one of the few global oil and gas companies that were able to score a net profit throughout 2020. Last year, Pertamina was able to reverse its loss position in the first semester of 2020. Profits from the Indonesian government-owned oil company are said to reach Rp. 14 trillion at the end of the year.

Nicke Widyawati

"Efforts are being made to increase the productivity of upstream oil and gas and refineries, as well as efficiency in all fields, namely cutting the Opex by 30% and prioritizing the investment budget," said Pertamina President Director Nicke Widyawati.

Exxonmobil

    A number of global oil and gas companies have experienced different conditions. Over the past year, Shell recorded a loss of US $ 21.68 billion or around Rp 303 trillion, Exxonmobil US $ 22.44 billion or around Rp 314 trillion, Chevron US $ 5.5 billion or around Rp 77 trillion, BP US $ 20, 3 billion or around Rp. 284 trillion, and Petronas 21 billion ringgit or around Rp. 73.5 trillion.

BP

    Meanwhile, Petrobras earned a profit of US $ 1.1 billion or around Rp 15 trillion, while Pertamina is claimed to have earned a profit of US $ 1 billion or around Rp 14 trillion over the past year. 

    ExxonMobil CEO Darren Woods said last year, the company was facing market conditions that were more challenging than they had experienced before. The effects of the Covid-19 pandemic will significantly affect performance results in 2020.

"We are responding decisively to fixing our fee structure permanently," he said.

Chevron

    Chevron CEO Mike Wirth said that when market conditions deteriorated last year, his side quickly cut capital spending by 35% from 2019 and lowered operating costs. In 2020, Chevron will also increase renewable energy production and increase investment in low-carbon technology. 

    Energy Watch Executive Director Mamit Setiawan assessed that last year was a grim period for the global oil and gas industry, including at home, due to pressure from the Covid-19 pandemic.

Bisnis Indonesia, Page-4, Wednesday,  March 17, 2021

January, Upstream Oil and Gas Investment Reaches The US $ 8732 Million

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) noted that the realization of upstream oil and gas investment in January 2021 reached US $ 873.2 million or 7.05 percent of this year's target of US $ 12.38 billion. This realization is better than the condition in January 2020 which was the only US $ 767.5 million.

Blogger Agus Purnomo in SKK Migas

    Acting Head of Program and Communication Division of SKK Migas Susana Kurniasih said the investment achievement was after the successful completion of the accelerated completion of supporting documents for program implementation at the end of last year.

"So that the realization of investment in January 2021 is higher in number and percentage compared to the same period last year," said Susana.

    Susana explained that the investment realization in January was to support exploration and development activities. These exploration activities were carried out by PT Pertamina EP, PT Pertamina Hulu Mahakam (PHM), ENI East Sepinggan, PT Pertamina Hulu East Kalimantan (PHKT), and PT Pertamina Hulu Energi Offshore South East Sumatra (PHE OSES).

ENI

    Meanwhile, development activities in the form of Well drilling were carried out by PHM, ENI East Sepinggan, Pertamina EP, PT Pertamina Hulu Sanga-Sanga (PHSS), PT Pertamina Hulu Energi Offshore North West Java (PHE ONWJ), Petronas Carigali Ketapang II, Exxon Mobile Cepu Limited EMCL, and BP Tangguh.

 Blogger Agus Purnomo in Petronas Carigali Ketapang II

    From the procurement aspect, the 2021 procurement list, which was completed at the end of last year, was able to accelerate the process of procuring goods and services this year.

"In addition, the highest number of procurement packages is in January 2021, so that KKKS (cooperation contract contractors) will have a longer time to carry out operations for upstream oil and gas management," said Susana.

    His party will continue to oversee upstream oil and gas investment this year, including related to licensing and procurement of goods and services. He hopes that the minimum procurement constraints can encourage optimal investment absorption. 

    In addition, his party will coordinate with the Investment Coordinating Board (BKPM) so that this year's upstream oil and gas activity plan can be carried out as planned. He is also optimistic that upstream oil and gas investment this year will be better than last year.

"As world oil prices improve, business players' optimism towards Covid-19 prevention and massive vaccination in various countries including Indonesia, the upstream oil and gas business climate this year will be much better than 2020," said Susana.

    The investment realization also has an impact on the smooth running of upstream oil and gas projects. Of the target of 12 upstream oil and gas projects this year, two projects have started operating in January, namely the KLD ONWJ Project with an investment of US $ 34 million and the gas supply project to the Balikpapan Refinery of US $ 27 million. This month, the US $ 46 million West Pangkah Project is scheduled to start operating.

Investor Daily, Page-10, Wednesday, Feb 24, 2021

Upstream Oil and Gas Investment is US $ 873.2 Million

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) said the realization of upstream oil and gas investment in January 2021 was positive. Investment realization last month was recorded at the US $ 873.2 million or 7.05 percent of the investment target of US $ 12.38 billion this year. 

    Acting Head of Program and Communication Division of SKK Migas Susana Kurniasih revealed that the realization of this investment was higher than the investment achievement in the same period in 2020 which amounted to the US $ 767.5 million or 5.55% of the annual target.

ENI

    Meanwhile, investment realization throughout January 2021 was used to support exploration activities, including by Pertamina EP, Pertamina Hulu Mahakam, ENI East Sepinggan, Pertamina Hulu East Kalimantan, and PHE OSES. In addition, this investment is also used to finance development activities. 

Exxon Mobile Cepu Ltd (EMCL)

    Primarily, the drilling of development wells, such as carried out by Pertamina Hulu Mahakam, Pertamina Hulu Sanga-Sanga, PHE ONWJ, ENI East Sepinggan, Pertamina EP, Petronas Carigali Ketapang II, Exxon Mobile Cepu Ltd (EMCL) and, BP Tanguh.

Blogger Agus Purnomo in Petronas Carigali Ketapang II

BP Tanguh

    Since discussing work, program, and budget (WP&B), SKK Migas claims to continue to coordinate with Cooperation Contract Contractors (KKKS), by conducting supervision and assistance with work program plans that have been approved in WP&B 2021. SKK Migas sees, accelerating the implementation of work programs in KKKS by endeavoring to complete the supporting documents for this year's program implementation has shown good results.

                                Blogger Agus Purnomo in SKK Migas

"So, the investment realization in January 2021 is higher in number and percentage compared to the same period last year, said Susana.

    SKK Migas and KKKS have also completed the 2021 procurement list at the end of 2020 and are also considered to have a positive impact on efforts to accelerate the process of procuring goods and services this year. 

    In addition, the highest number of procurement packages was in January 2021. As a result, KKKS will have a longer time to carry out operations for upstream oil and gas management. Susana explained, efforts to oversee upstream oil and gas investment were continuously carried out from various aspects, including licensing and procurement of goods and services. SKK Migas hopes that the absence of obstacles in the procurement process will contribute to optimal investment absorption.

    Indeed, investment requires support from various related agencies. On that basis, SKK Migas continues to carry out intensive coordination including with the Investment Coordinating Board (BKPM) so that the 2021 work program can be carried out according to the target. 

    SKK Migas is also optimistic that investment realization in 2021 will be better than in 2020. This is in line with the continuing improvement in world oil prices and optimism among business players towards the prevention of Covid-19.

"As well as the implementation of massive vaccinations in various countries including Indonesia, the upstream oil and gas business climate this year will be much better than in 2020," said Susana.

    The improved investment realization also had an impact on the smooth running of upstream oil and gas projects. Of the 12 onstream upstream oil and gas project targets, in January 2021 there were two onstream projects, namely the KLD ONWJ project with an investment value of US $ 34 million and the gas supply project to Pertamina Refinery Unit 5 Balikpapan with an investment value of US $ 27 million.

"In February 2021, the West Pangkah project is planned to be onstream with an investment of US $ 46 million," concluded Susana.

Kontan, Page-13, Tuesday, Feb 23, 2021

The Jumbo Oil and Gas Project Is Still Ongoing

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) ensures that several upstream oil and gas projects are still continuing. This is to support the achievement of oil production targets of 1 million barrels per day and natural gas 12 billion standard cubic feet per day by 2030.

the Merakes project 

    Deputy for Operations of SKK Migas, Julius Wiratno, said that major projects in the upstream oil and gas sector are still in the construction stage, some of which are expected to be completed by the end of 2021. One of them is the Merakes project which is being worked on by Eni East Sepinggan.

Eni

"We hope this project can be on stream in April with gas production of 380-400 mmscfd," he said.

the Jambaran Tiung Biru (JTB)

    There is also the Jambaran Tiung Biru (JTB) project that is being supported by SKK Migas and the government so that it can be on stream in November this year. In the future, the project managed by PT Pertamina EP Cepu (PEPC) will produce 350 mmscfd of gas.

    SKK Migas is also working on the Tangguh Train-3 project that BP Berau Ltd is working on to be on stream immediately at the end of this year or early next year.

Blogger Agus Purnomo in SKK Migas

    The project is indeed constrained from an operational perspective due to restrictions on social activities in the context of tackling the Covid-19 pandemic.

the Masela Block

"Other major projects such as Indonesia Deepwater Development (IDD) and the Masela Block are in the process of business-to-business discussions between contractors and their partners," said Julius.

Indonesia Deepwater Development (IDD) Chevron

    The IDD project is facing obstacles because its main investor, Chevron Pacific Indonesia, is reportedly leaving, even though this project should be targeted to be on stream in 2025.

Kontan, Page-10, Saturday, Feb 20, 2021

Hard Work in the Upstream Oil and Gas Industry

 

Although the oil and gas industry is still challenging, the Special Task Force for Upstream Oil and Gas Business Activities or SKK Migas still targets 14 upstream projects to start operating this year.

SKK Migas Operations Deputy Julius Wiratno said that this year, there were 12 upstream oil and gas non-PSN (National Strategic Projects) projects that were targeted to start operating or onstream. The number is an increase of one project compared to last year's target.

Blogger Agus Purnomo in SKK Migas

"There will be 12 non-PSN projects on stream with a project value of US $ 354 million and the potential for additional oil production of 27,000 bpd and 492 MMscfd of gas," he said.

Meanwhile, the two PSN projects that will be onstream in 2021 are the Jambaran Tiung Biru project by PT Pertamina EP Cepu (PEPC) and the Tangguh Train-3 project by BP. 

PT Pertamina EP Cepu (PEPC)

    The Jambaran Tiung Biru project is projected to be onstream in the fourth quarter of 2021. The project work as of the third quarter of 2020 still reached 74.28% of the target of 88.28%. 

The Jambaran Tiung Biru Oil Field

    Similar to the Tiung Biru Jambaran Project, the Tangguh Train-3 project is projected onstream in the fourth quarter of 2021. As of September 2020, the progress of Tangguh Train-3 onshore work has reached 88.27%, and offshore has reached 98.27%.

the Tiung Biru Jambaran Project

"Apart from the difficulties of the Covid-19 pandemic, we are still targeting onstream at the end of 2021," he said.

Although SKK Migas is optimistic that the work plan in the upstream oil and gas sector will proceed as planned, a number of challenges, particularly those affecting the project's economy, are still looming. The government is also considered to have to be more active so that a number of oil and gas projects whose work is constrained can be realized immediately. 

    So far, there are two upstream oil and gas projects that are still unclear because the company plans to release its participation, namely Shell in the Masela Block Abadi field project and Chevron in the Indonesia Deepwater Development (IDD) project.

Trisakti University teaching staff Pri Agung Rakhmanto explained that in the case of the Masela Block project, the government needs to be more active to play a role in obtaining gas buyers. Meanwhile, in the IDD project, middle ground and a compromise must be found in terms of project economics. 

    An observer of the energy economy from Gadjah Mada University Fahmy Radhi is of the opinion that the government should step in so that the Masela Block construction can be completed on time, including in land acquisition to build a pipeline network. This is an important part needed to distribute the gas produced from the Abadi field.

"The challenge is completing the construction and pipeline infrastructure for gas distribution from the Masela Block to consumers. With great prospects, it is not difficult for Inpex to find investors to replace Shell, "he said.

The Executive Director of the National Oil and Gas Companies Association (Aspermigas), Moshe Rizal Husin, assessed that the homework that the government still has to do is to revive the investment climate in the upstream oil and gas sector. Meanwhile, based on SKK Migas data, the realization of upstream oil and gas investment in 2020 only reached the US $ 10.21 billion, lower than the target of US $ 12.1 billion. For this year, SKK Migas is targeting upstream oil and gas investment of US $ 12.3 billion.

"There must be a significant breakthrough and commitment from the government that creates certainty. The oil and gas business is long-term and has a very large multiplier effect, ”said Moshe.

Moshe hopes that the condition of the upstream oil and gas industry this year can run better with stable oil prices at a level above the US $ 50 per barrel or even could improve to the level of US $ 60 per barrel in the third quarter of 2021.

KEEP PRODUCTION

In other developments, the development program in the Mahakam Block will run more aggressively in order to reduce the rate of natural production decline. SKK Migas has approved the work plan of PT Pertamina Hulu Mahakam (PHM) in 2021 with more drilling activities compared to 2020. Thus, production in the Mahakam Block in 2021 is expected to increase with more massive and aggressive optimization.

Deputy of Finance and Monetization of SKK Migas Arief S. Handoko said that if production from the Mahakam Block drops, domestic LNG production will also decline. However, PHM will get incentive approval so that production is maintained.

Merakes Field By ENI Italy

"The possibility of production stays, even increases. In addition, there is a new Merakes field that will contribute so that LNG production will increase, ”he explained.

Agus Amperianto

Likewise, General Manager of PHM Agus Amperianto said that his party is optimistic that it can maintain production in the Mahakam Block by optimizing work in the field development operations that have been approved by SKK Migas.

"Currently, what is possible for Mahakam to do is how to survive in times of crisis," he said.

He added that this year there are a number of efficiency programs, including reducing the operating costs of the Mahakam Block effectively and efficiently. In addition, PHM will also strengthen operational activities through collaboration, strengthening knowledge management, and organizational transformation. 

    Based on the 2021 work program and budget (WP&B), PHE will carry out 73 development well drilling activities and two exploration wells drilling. Meanwhile, as of December 31, 2020, the realization of PHE's oil and gas production was still above the target.

Oil and condensate production was recorded at 26,363 bpd or 102% of the revised WP&B of 25,722 bpd. Meanwhile, gas production reached 606 MMscfd or 103% compared to the revised WP&B of 588 MMscfd.

Bisnis Indonesia, Page-4, Tuesday, Jan 5, 2021