Environmental Audit Completed, Rokan Block's Fate in the Hands of the Ministry of Energy and Mineral Resources

The fate of the continued development of the Rokan Block is now in the hands of the Ministry of Energy and Mineral Resources (ESDM) after the Environmental audit was completed in August 2020.

the Rokan Block by Chevron

Deputy for Maritime Sovereignty and Energy Coordination at the Coordinating Ministry for Maritime Affairs and Investment Purbaya Yudhi Sadewa said the recommendations given by the Environmental audit team had reached the Coordinating Ministry for Maritime Affairs and Investment.

"It is still in line with the plan so far. There are almost no obstacles," he said

Purbaya said, currently the finalization stage is in the hands of the Ministry of Energy and Mineral Resources, especially to ensure the implementation of the head of agreement (HoA). However, it is a bit difficult to ensure that the HoA can be signed this week. Although he did not specify, he said Chevron's drilling plan for next November had not changed.

Blogger Agus Purnomo in SKK Migas

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) confirmed that the Rokan Block Environmental audit process was completed in August this year. Acting Head of Program and Communication Division of SKK Migas Susana Kurniasih said PT Chevron Pacific Indonesia (CPI) is considered to carry out management in accordance with environmental management laws and regulations.

"The results of the audit have been reported to the Coordinating Minister for Marves and then SKK Migas and Chevron will sign ahead of the agreement for the management of the Rokan Block during the transition period," said Susana.

The HoA that will be signed includes a commitment to drilling activities in November 2020 and drilling in 2021. Not only that, but HoA will also include the post-mining recovery fund reserve, whose activities will be carried out by Pertamina Hulu Rokan (PHR). Susana ensured that this would not interfere with PHR's operating costs.

"The finalization process is being carried out, all parties hope it will be completed this September," said Susana.

Kontan, Page-13, Monday, Sept 7, 2020

Change of ownership of IDD projects must be completed this year

 

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that the change in ownership of Participating Shares (participating interest / PI) for the Indonesia Deepwater Development (IDD) project must be completed this year. Otherwise, the deep-sea gas project will not start immediately.

Dwi Soetjipto

Head of SKK Migas Dwi Soetjipto said that Chevron Indonesia as the operator of the IDD Project is still looking for an oil and gas company to work on the project. If indeed there will be a change in PI ownership, his party emphasizes that it can be completed this year. Because if it takes too long the IDD project may not be developed immediately.

“Actually, the real timeline [change of PI owner] depends on the deal. But I want to be this year. If it doesn't start immediately, the project won't take place, ”he said.

the IDD project  by Chevron

According to him, the urgency of completing the change in shareholders in the IDD Project is different from the Abadi LNG Project, the Masela Block. 

the Masela Block.

    This is because until now, the revised Plan of Development / PoD for the IDD project has not yet been completed. So that if the change of PI owner is not completed immediately, the project cannot operate.

ENI

Regarding the opportunity for ENI to replace Chevron, Dwi explained that the Italian oil and gas company currently also holds shares in the IDD Project. Not only that, but ENI also manages two oil and gas projects which are located adjacent to the Chevron project. Even ENI already has production facilities because the project has been operating since 2017.

Chevron

"Apart from the agreement between the two parties, ENI has a good positioning to be able to develop the IDD project. ENI has facilities and can be integrated, and if possible, the investment can be reduced so that the economy is better, "he explained.

However, the government is not in a position to suggest who will replace Chevron in the IDD Project. The government will look at who will enter and consider the experiences of oil and gas companies wishing to enter the gas project in the Makassar Strait.

"So our consideration is for this project to start, be able to produce, and become the supporting capacity to achieve the target of 1 million barrels per day (bpd)," said Dwi.

On the other hand, he said the government supports the extension of the Production Sharing Contract / PSC block of oil and gas that is included in the IDD Project, namely the Meeting oil and gas block and the Ganal oil and gas block. 

    This is because the Rapak oil and gas block contract will expire in 2027 and the Ganal oil and gas block will be completed in 2028. Without the extension, he admits that oil and gas companies will find it difficult to develop the IDD project.

"Although later asking for approval from the government regarding the extension of the PSC. But the government will support the extension if the contractor is serious about carrying out the project, "he said.

In the IDD Project, Chevron is the operator and majority shareholder of 63%. Chevron is working on this deep-sea oil and gas project with other joint venture partners, namely Eni, Tip Top, PT Pertamina Hulu Energi (PHE), and partners in Muara Bakau.

Referring to SKK Migas data, until last June, the IDD Project was still in the process of evaluating the approval of the POD revision. In addition, this project is still in the process of evaluating the proposed extension of the Rapak and Ganal Block PSCs.

The IDD project combines two oil and gas fields, namely Gendalo Field, Ganal Block, and Gehem, Rapak Block. Still based on SKK Migas data, this project is targeted to reach a peak gas production of 844 million standard cubic feet per day / MMscfd and 27 thousand BPD of oil. The US $ 6.98 billion projects is planned to start operating in the fourth quarter of 2025.

Investor Daily, Page-10, Tuesday, August 11, 2020

ENI has the potential to replace Chevron in working on the IDD project

 

The Ministry of Energy and Mineral Resources (ESDM) said Chevron Indonesia would withdraw from the Indonesia Deepwater Development (IDD) Project. The oil and gas company from the United States is offering management rights to ENI.

the Indonesia Deepwater Development (IDD) By Chevron

The Acting Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Ego Syahrial, said that Chevron is interested in working on the IDD project because it is still managing the Rokan Block. Once the management rights were transferred after the production sharing contract / PSC for the Rokan Block ended, Chevron also intended to withdraw from the IDD project.

"Chevron is an IDD package with Rokan. If Chevron leaves the Rokan block, that means Chevron is also out of the IDD project, ”he said.

Chevron is currently still looking for a replacement who will work on the IDD project. One of the candidates being offered by Chevron is an Italian oil and gas company, ENI.

"Now offered by ENI, I think so. The point is they are offering themselves to each other, which I know Chevron is offering. We'll just wait, "explained Ego.

Regarding Eni, the oil and gas company recently signed a contract with the government for the West Ganal Block. This block was previously part of the Makassar Strait Block, which contains the West Seno Field which has been developed by Chevron. Eni also manages the Muara Bakau and East Sepinggan Blocks which are located near the IDD Project.

the Muara Bakau and East Sepinggan Blocks

Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said that his party is still waiting for a report from Chevron regarding the follow-up of the IDD Project. His party has even been chasing the oil and gas company from the United States to immediately make a decision whether to continue this project or not.

Dwi Soetjipto

"The letter from SKK Migas has not been replied to. We are still discussing it. We'll just wait, "he said.

In the IDD Project, Chevron is the operator and majority shareholder of 63%. Chevron is working on this deep-sea oil and gas project with other joint venture partners, namely Eni, Tip Top, PT Pertamina Hulu Energi (PHE), and partners in Muara Bakau. 

SKK MIGAS

      Referring to SKK Migas data, until last June, the IDD Project was still in the process of evaluating the approval of the plan of development / POD revision. In addition, this project is still in the process of evaluating the proposed extension of the Rapak and Ganal Block PSCs.

The IDD project combines two oil and gas fields, namely Gendalo Field, Ganal Block, and Gehem, Rapak Block. Still based on SKK Migas data, this project is targeted to reach a peak gas production of 844 million cubic feet per day (million standard cubic feet per day / MMscfd) and 27 thousand barrels of oil per day (bpd).

     The US $ 6.98 billion projects are planned to start operating in the fourth quarter of 2025. If Chevron releases the IDD project, there will be no more oil and gas projects in Indonesia that the oil and gas company will undertake. 

        The reason is, the management of the Rokan Block has been decided to be transferred to PT Pertamina (Persero) starting in 2021. However, Ego said, this does not mean Chevron will leave Indonesia.

"We don't know, later in the middle, there could be a project," he said.

PT Chevron Pacific Indonesia (CPI)

PT Chevron Pacific Indonesia (CPI) Corporate Communication Manager Sonitha Poernomo said, although the Kutei Basin is an attractive hydrocarbon area, the IDD Project cannot compete for capital in Chevron's global portfolio.

Sonitha Poernomo

Chevron Rapak Ltd (CRL) opened a data room to facilitate discussions on identifying potential partners for the project earlier this year. According to company policy, it was unable to provide detailed information on commercial negotiations. However, his party will continue to work with SKK Migas and potential partners to help realize the potential development of the IDD Project.

"We believe this project will have value for other operators and the Kutei Basin can continue to be developed safely," said Sonitha Poernomo.

 Investor Daily, Page-10, Friday, August 7, 2020

Chevron sells IDD blocks

 

PT Chevron Pacific Indonesia's plan to exit the second phase of the development of the second phase of the Indonesia Deepwater Development (| DD) Block is very serious. Chevron has even offered the deep-sea gas block to its partner, Eni, an Italian oil and gas company.

the Indonesia Deepwater Development (| DD) Block

Acting Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources Ego Syahrial confirmed the news that Chevron was offering to develop the block to Eni.

"Chevron has already proclaimed it, now it is being offered to Eni, we'll just wait. Chevron is the one making the bid to Eni," he explained.

However, Ego was reluctant to reveal what the block release scheme would be like and the bid value. Currently, in the Deep Sea project, Chevron acts as the operator and the majority shareholder, which is 63%.

Chevron is working on this oil and gas project in Iaut with other partners, namely Eni, Tip Top, PT Pertamina Hulu Energi, and partners in Muara Bakau. IDD is a deep-sea gas project carried out by Chevron Indonesia Company (Cico) in the Kutai Basin, East Kalimantan through four production sharing contracts, namely PSC Ganal, Rapak, Makassar Strait and Muara Bakau.

The second phase development in the IDD Block includes the development of the Gendalo field and the Gehem field. There are plans to develop two separate hubs where Gendalo and Gehem will have a Floating Production Unit (FPU) for each field (see table). 

    Ego assessed that Chevron's plan to leave the IDD Block was inseparable from Chevron's not being extended to other oil and gas blocks in Indonesia, namely the Rokan Block. Later, in the year 2021. PT Pertamina (Persero) will continue the block located in Riau. "so one package," he said.

Dwi Soetjipto

Meanwhile, Dwi Soetjipto, Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), said that his party had asked Chevron's assurance for the continued management of the IDD Block. However, until now the letter sent by SKK Migas to Chevron has not been immediately responded to.

"Not yet replied, we are still discussing it," he said.

SKK Migas needs to be certain about the current condition of the IDD Block. This is because there are already oil and gas companies that are interested in continuing the project. Chevron also has not yet sent the IDD Block management work plan or plan of development (PoD), which has been requested since January 2020. 

Sonitha Poernomo

    Manager of Corporate Communications of PT Chevron Pacific Indonesia, Sonitha Poernomo said that his party had opened a data room to facilitate discussions on identifying potential partners for IDD Block earlier this year.

"At this time, there is no final decision regarding the discussion," She said.

Regarding the plan to leave the IDD Phase 2 project, Sonitha explained that his party could not compete for capital in the global Chevron Group portfolio. Therefore, he believes this project will have value for other operators.

"We will continue to work closely with SKK Migas and potential partners to help realize the potential of this project. However, according to policy, we cannot provide detailed information about commercial negotiations, "She said.

Kontan, Page-12, Friday, August 7, 2020

SKK Migas Claims Certainty to Chevron

PT Chevron Pacific Indonesia's commitment is not clear in the development of the Phase II IDD Block project in the Gendalo-Gehem Field. In response to this, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) sent an official letter to Chevron Pacific.

PT Chevron Pacific Indonesia's

SKK Migas questioned Chevron's commitment to continue the development of the Indonesia Deepwater Development (IDD) Block. Previously, Chevron sent a signal not to continue the development of Phase II of the IDD Block. This is the result of the development of phase II of the IDD Block which is not included in the global portfolio of the US oil and gas company.

the Indonesia Deepwater Development (IDD) Block

The Acting Head of the SKK Migas Program and Communication Division, Susana Kurniasih, claimed that up to now Chevron had never formally submitted the plan to leave the Phase II project IDD Block to SKK Migas.

SKK Migas has actually tried to urge Chevron to provide certainty related to the development of the IDD Block. Last week SKK Migas had written a letter to Chevron asking about the continuation of operations, Susana said.

Indeed SKK Migas still hopes that the IDD Block Phase II development activities will be realized soon, despite the challenges in the upstream oil and gas industry sector lately. PT Chevron Pacific Indonesia's Corporate Communication Manager Sonitha Poernomo was reluctant to comment much regarding the certainty of Chevron's planned exit from the IDD Block II development project.

Sonitha Poernomo

"We are still continuing to coordinate with the government and potential partners to develop IDD development solutions, said Sonitha.

Eni

In the IDD project, Chevron acts as the operator and holds a 63% stake or Chevron's participating interest working on the oil and gas project in the deep sea with several partners such as Eni, Tip Top, PT Pertamina Hulu Energi, and Muara Bakau partners. Phase II development of the IDD Block includes the development of the Gendalo Gehem Field with an investment of US $ 12 billion.

Kontan, Page-12, Wednesday, August 5, 2020

Global Oil and Gas Company Tighten the Belt

Concerning a compact global oil and gas company increasing efficiency, matching the weakening world oil prices, oversupply, and weak commodity demand in the world due to the Covid-19 pandemic. Based on the official report of ExxonMobil Corporation, the company in the second quarter of 2020 cut capital expenditure to the US $ 5.3 billion, lower the US $ 2 billion for capital expenditure in the first quarter / 2020.

This year ExxonMobil cut investment costs from the US $ 33 billion to the US $ 23 billion in accordance with increased efficiency, lower commodity prices, and faster project rates. Not only that, but savings were also made for the company's operational costs which could be increased by 15% because it was approved by the activities and volume reduction.

"The Covid-19 pandemic has an impact on the company's finances and operations which has led to an increase in the cost of capital and operating cash than agreed," as released by the management.

Not much different, Chevron Corporation also decided to be more efficient in overcoming the condition of the upstream oil and gas industry which has not improved. Chevron Corporation CEO Michael K. Wirth said that in response to the severe upstream oil and gas conditions, his side reduced the capital expenditure budget and cut operational costs this year.

Michael K. Wirth

In the second quarter / 2020, Chevron only realized capital expenditure of the US $ 3 billion or 40% below its quarterly budget. For this year, Chevron revised its capital expenditure to purchase the US $ 14 billion. Meanwhile, operating costs in the II / 2020 quarter were realized at a value of US $ 7.1 billion, an increase of 13% compared to the II / 2020 quarter.

"While there are no signs of improvement in demand and commodity prices at pre-pandemic levels, financial results may continue to be depressed until the first quarter of 2020," he explained.

Related to the efficiency efforts, Teaching Staff of Trisakti University Pri Agung Rakhmanto rate, the efficiency assessment conducted by global oil and gas companies will be increased in upstream oil and gas projects in the country. According to him, the economic level of the project is an important factor for investors to continue the upstream oil and gas project in Indonesia.

Are projects in Indonesia included in the priority rankings of their global portfolio or not? But it should indeed be changed. Because generally, it has been quite a long time, our upstream oil and gas are not very attractive, "he said.

He added, oil and gas companies at the mayor level such as Shell and Chevron will issue investments based on the rankings of global investment portfolio companies in accordance with their competitive level. In addition, the projects approved by the projects undertaken are not included in the company's economic standards or portfolio ratings, so there is a great chance of being accepted.

If our upstream oil and gas projects are less competitive or economically disadvantaged with their projects in other countries, then of course they will eventually withdraw from their projects in Indonesia, "Pri said.

Cameron Van Ast

To note, Shell and Chevron are also known to change their investment portfolios in the oil and gas sector in the world, including for projects in Indonesia. Chevron Asia Pacific External Affairs Advisor Cameron Van Ast said it was giving a signal to release its participation in the IDD project. 

the IDD project Chevron

He revealed the plan had been reviewed since early 2020 and was not related to the acquisition of Noble Energy shares on July 20, 2020.

Dwi Soetjipto

SKK Migas Head Dwi Soetjipto previously revealed that the upstream oil and gas investment trend in the world this year is projected to fall by around 30% to the US $ 228 billion from the initial target in 2020, valued at the US $ 325 billion.

Bisnis Indonesia, Page-4, Wednesday, August 5, 2020

There is Still Hope in Upstream Oil and Gas

Upstream oil and gas investment in Indonesia is believed to be still prospective, despite a number of challenges due to fluctuations in world oil prices and the Covid-19 pandemic. Moreover, the government has also given the flexibility to investors to choose the form and production sharing contract in oil and gas activities.

The policy is believed to provide legal certainty and increase oil and gas investment in Indonesia. But of course, it must be punctuated by the right strategy and oil and gas investors to survive and get out of the crisis.

Arcandra Tahar

Former Minister of Energy and Mineral Resources (ESDM) for the 2014-2019 period Arcandra Tahar said investment in upstream oil and gas was not merely a matter of the political situation in a country. According to him, the majority of investors will enter the oil and gas project which is considered to provide good profits for the company.

"Investment does not recognize citizenship. That is, where there is a profitable investment, investors will enter, "he said.

 

the Masela block

Referring to the news of Shell's departure from the Masela and Chevron Block projects on the Indonesia Deepwater Development (IDD) project, Arcandra said many factors could trigger the decision. Comprehensively the decision could be influenced by the shifting focus of the company relating to economic value. But the withdrawal of two global oil and gas companies from the project in Indonesia cannot be used as a reference that investment conditions in Indonesia are not good.

"Can you see that their assets (Investors) are sold abroad? I think so. What does it mean, if we only look at it from one side, the investment climate might not be okay. "

He considered the mix of business portfolios in oil and gas companies could be one strategy to get out of the crisis. According to him, the weakening of world oil prices and falling demand that occurred some time ago along with the Covid-19 pandemic was one of the extraordinary events.

However, basically the oil and gas industry is a business whose principles always fluctuate, so there should be mitigation to go through difficult times. Was this not prepared in advance by the oil and gas company? I think it's been prepared, "Arcandra said.

Shell

For this reason, the business portfolio mixes between upstream and downstream needs to be balanced considering that there are still oil and gas companies that can get profit, in a state where oil prices are skyrocketing or weakening. According to him, this was also done by large-scale global oil and gas companies such as Shell and Chevron. In addition, the oil and gas companies have begun to apply the trend to anticipate difficult times.

"So a strong company, a balance between upstream and downstream. Even if a medium company has a good strategy, besides having a business in the upstream, they also anticipate it in the downstream, "he explained.

Dwi Soetjipto

SKK Migas Head Dwi Soetjipto projects that oil and gas investment this year will only reach US $ 11.6 billion, down 16% from the target of US $ 13.8 billion. According to him, global upstream oil and gas investment trends this year are also projected to fall by around 30% to the US $ 228 billion from the initial 2020 target of US $ 325 billion.

"So in Indonesia the decline is far better than the global upstream oil and gas trends," he said.

PORTFOLIO CHANGE

Both Shell and Chevron are known to change their investment portfolios in the upstream oil and gas sector in the world, including for projects in Indonesia. Chevron Asia Pacific External Affairs Advisor Cameron Van Ast said it was giving a signal to release its participation in the IDD project. 

He revealed that the plan had been reviewed since the beginning of this year and he dismissed that the decision was related to the acquisition of Chevron in Noble Energy shares on July 20, 2020.

PT. Chevron Pacific Indonesia's

Chevron Pacific Indonesia's Corporate Communication Manager Sonitha Poernomo added that the Phase 2 IDD project could not compete for capital in Chevron's global portfolio. Meanwhile, Shell was quoted from the official website of Shell Global, dividing the oil and gas company's business into the upstream business, integrated gas, renewable energy, and downstream business.

Sonitha Poernomo

In line with Arcandra, Secretary-General of the National Energy Board Djoko Siswanto is optimistic that Indonesia's upstream oil and gas sector is still in good condition and attractive to investors. 

Hilmi Panigoro

    On the other hand, President Director of Medco Energi Hilmi Panigoro revealed that Indonesia's biggest challenge to bringing in investment in the upstream oil and gas sector is legal certainty which is more attractive to investors.

According to Hilmi Panigoro, there are many investors who prefer other countries than Indonesia even though the tax conditions and political conditions are not better. Hilmi said this could happen because the investors considered that they did not have more risks given the clear legal certainty.

"For example, now the government is changing its paradigm, energy is not a source of revenue, then gas prices are lowered, but the contractor's rights must be maintained so that investors believe. So whatever the form of the regime, what is important right now is how this new law can be a guarantee, so the signed agreement must be maintained, "he explained.

Regarding oil and gas production sharing contracts, ESDM Minister Arifin Tasrif issued Minister of Energy and Mineral Resources Regulation No. 12 of 2020 concerning the Third Amendment to the Minister of Energy and Mineral Resources Regulation No. 8 of 2017 concerning Gross Split Production Sharing Contracts.

In Article 2 paragraph (2) of the Ministerial Regulation, it is explained the form and cooperation contract can use Gross Split, Cost Recovery, or other cooperation contracts. Arifin also abolished the provisions regarding the management of the Work Area that ended the contract period and was not extended, the government imposed a Gross Split for the next period. In addition, in the case of Work Areas that will expire in the contract period, the government can stipulate all cooperation contracts or Gross Split.

Bisnis Indonesia, Page-10, Monday, August 3, 2020

Upstream Oil and Gas Demands Immediate Incentives

The lively plan to leave global oil and gas companies from Indonesia must receive serious attention. Because, at present the competition in the upstream oil and gas investment portfolio at the regional and global level is getting tougher. Especially in the global pandemic situation that afflicts almost all countries in the world. Conditions that make oil and gas companies really count when investing.

"At that time, global companies will only aim at investment portfolios in countries that are considered truly profitable and occupy their priority scale," said Oil and Gas Observers from Trisakti University, Pri Agung Rakhmanto.

Now, to attract investment in upstream oil and gas, various government incentives need to be prepared. The incentive makes the oil and gas investment climate in Indonesia more attractive. 

Royal Dutch Shell (Shell)

       Just so you know, within this month, there are two global investors who want to leave the area hit by oil and gas in Indonesia. First Royal Dutch Shell (Shell) will sell its 35% stake in the Masela Block.

the Masela Block

The two PT Chevron Pacilik Indonesia (Chevron) are reluctant to continue the Phase II project in the Indonesia Deepwater Development (IDD) Block. Indonesian Petroleum Asociation (IPA) Executive Director, Marjolijn Wajong said oil and gas companies both domestically and globally are considering market conditions and oil and gas commodity prices, especially after the Covid-19 pandemic subsided.

the Indonesia Deepwater Development (IDD) Block

"Most still wait and see to see how things are after the pandemic has subsided," said Marjolijn Wajong.

Chairman of the Association of Oil and Gas Companies (Aspermigas), John S. Karamoy added, the government needs to be introspective with the current condition of oil and gas investment. The withdrawal of some global companies is expected to not interfere with the development of the upstream oil and gas business in Indonesia.

The Acting Head of the SKK Migas Program and Communication Division, Susana Kurniasih, admitted that her office continued to monitor developments in upstream oil and gas investment. Meanwhile, upstream oil and gas incentives are still being discussed together with the Ministry of Finance (MoF). 

    So far, there has been an incentive from SKK Migas in the form of postponement of the Depository Siter Restoration (ASR) deposit. Well, SKK Migas also proposes other stimuli to attract investment.

"We and the Ministry of Finance (Ministry of Finance) are discussing together, but the decision is not at SKK Migas," he said.

He revealed that the stimulus to delay the deposit of ASR was to ensure that the KKKS could continue their operations during the Covid-19 pandemic.

Kontan, Page-10, Saturday, July 25, 2020