Upstream Oil and Gas Successfully Recorded Excellent Performance

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) has managed to record brilliant performance throughout 2020 by achieving several targets set by the government.

Blogger Agus Purnomo in SKK Migas

It is recorded that the national upstream oil and gas sector produced five impressive achievements in the aspects of the Reserve Replacement Ratio (RRR), oil and gas lifting, cost recovery control, state revenues, and completion of upstream oil and gas projects.

At the end of 2020, oil lifting was recorded at 706 thousand barrels of oil per day (BOPD) or 100.2 percent exceeding the target of the Revised State Budget (APBN-P) which was set at 705 thousand BOPD.

Meanwhile, gas lifting was 5,461 million standard cubic feet per day (MMSCFD), slightly below the APBN-P target of 5,556 MMSCFD or reached 98.3 percent. As for state revenues, the figure achieved was US $ 8.4 billion, or 141 percent of the target set at the US $ 5.86 billion.

Dwi Soetjipto

"2020 is a difficult year for all business actors, especially in the upstream oil and gas sector, apart from being affected by the Covid-19 pandemic, we are also overshadowed by low world oil prices. However, thanks to hard work with KKKS (Cooperation Contract Contractors), in the end, the upstream oil and gas industry succeeded in exceeding several targets set by the government. The contribution of this industry is expected to help the national economy which is also affected by the pandemic, ”said the head of SKK Migas, Dwi Soetjipto.

Dwi added that another achievement was that SKK Migas was able to complete 15 onstream projects out of the 11 targeted onstream projects or 136 percent. Of these 15 projects, the potential for additional oil production is 9,182 BOPD and gas of 111 MMSCFD. The upstream oil and gas investment reached the US $ 10.21 billion and cost recovery control was US $ 8.12 billion according to the government's target.

According to the Deputy Head of SKK Migas, Fatar Yani Abdurrahman, during the 2020 period, there were several important milestones that were achieved including the completion of 24 PSC Side Letters and 61 LoAs and Amendments to the Natural Gas Sale and Purchase Agreement (PJBG) related to gas price adjustments in accordance with the Regulation of the Minister of Energy and Mineral Resources No. 89K / 2020 and 91K / 2020.

"The total adjusted gas reaches 2,601 British thermal units per day (BBTUD), consisting of 1,205 BBTUD for the downstream industry and 1,396 BBTUD for the State Electricity Company (PLN). This gas price adjustment aims to have an economic impact on the country through growing downstream industrial activities and reducing the burden of electricity subsidies, "he explained.

In addition, SKK Migas also successfully completed the Heads of Agreement (HoA) for the transition to the Rokan Block on September 28, 2020.

PT CPI (Chevron Pacific Indonesia)

"With the implementation of the HoA, PT CPI (Chevron Pacific Indonesia) can conduct drilling to maintain Rokan production until the end of the contract," explained Fatar.

Sakakemang Block

Fatar added that the first Plan of Development (POD) for the Kaliberau Field, Sakakemang Block was also approved by the government on December 29, 2020. With this approval, the realization of the Reserve Replacement Ratio (RRR) stands at 101.6 percent with additional reserves of 705.16 MMBOE.

Meanwhile, based on this brilliant record, Fatar said SKK Migas was optimistic in welcoming 2021. He said that his party had finished compiling work programs and budgets with KKKS to achieve government targets.

"We know that the oil lifting target that has been set has not changed from this year, which is 705 thousand BOPD. To ensure there is no decline in production, SKK Migas is trying to carry out massive, aggressive and efficient activities. We are also determined, in 2021 there is no decline in national oil and gas production, "he concluded.

Bhirawa, Page-10, Monday, Jan 4, 2021

Potential The Rokan Block Still Becomes SKK Migas Mainstay

    The Rokan Work Area (WK) which will be managed by the Cooperation Contract Contractor (KKKS) Pertamina Hulu Rokan in August 2021 still has large potential reserves. Therefore, the success of managing the block is one of the keywords for success towards achieving the target of 1 million BOPD (barrels of oil per day) and 12 BSCFD of gas (billion cubic feet per day) by 2030.

    That is the summary of the Focus Group Discussion entitled "Guarding the Transition of Rokan, Maintaining National Production" which was held online in Jakarta (23/11). 

Satya Widya Yudha

    The FGD presented expert advisors to the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Satya Widya Yudha, Head of the Formality Division of SKK Migas, Didik S. Setyadi, Head of the Management of Goods and Services Procurement Division of SKK Migas, Erwin Suryadi, IATMI Practitioners, Hadi Ismoyo, National Oil and Gas Observer, Mukhtasor, Fahmy Radhi, and Abdul Muin.

    Satya said the potential oil reserves from WK Rokan are estimated to be 2 billion barrels. 

The Rokan Work Area (WK), Chevron

"Taking into account the existing potential, the WK Rokan will remain the backbone of national oil and gas production for a long time, through existing fields, field optimization, optimization of a waterflood, steam flood, and chemical EOR methods. So this working area will also be a mainstay to support the production target of 1 million barrels in 2030, "said Satya.

    Seeing this opportunity, SKK Migas is trying to make the transition period until 2021 run smoothly. This effort is not only a transition related to production operations but also other crucial matters, namely land-related permits.

Blogger Agus Purnomo in SKK Migas

"In the identification of SKK Migas, there is land that will be the drilling location but has not been certified as belonging to CPI (Chevron Pacific Indonesia), there is also the land that is still owned by the community. Permit readiness is absolutely passed because drilling equipment even though it is ready will be constrained if the land which is the drilling location is still controlled by other parties or the legality status is unclear, "said Head of the Formality Division of SKK Migas, Didik S. Setyadi.

Chevron Pacific Indonesia

    As an effort by SKK Migas to handle this matter, Didik said that his party is currently encouraging licensing to remain attached to the old operator. 

"Through the ODSP (One Door Service Policy), SKK Migas and CPI will resolve the licenses that are still neglected, this is so that while waiting for new operators to enter, operations will not stop. November 26, 2020, the list of licenses required by CPI must be final, "he explained.

    A similar sentiment was also conveyed by the Head of the Procurement Division of SKK Migas, Erwin Suryadi. 

“SKK Migas already has experience assisting the transfer of management of non-Pertamina CAs to Pertamina. We make learning each case so that when we manage the transfer of management of WK Rokan, we are sure that investors can still be implemented, "he said.

The Rokan Block Working Area Oil and Gas

    National oil and gas observer, Mukhtasor, said the transfer of management was quite complicated because the cooperation contract did not regulate matters related to management transfer. 

"One of the articles in the Ministerial Regulation ESDM # 15 of 2015 states that new operators can enter 6 months before the contract expires, this is not effective and will not be able to maintain production when new operators enter, "he said.

    However, his party appreciates the steps taken by CPI and SKK Migas which are trying to guard the transfer of management well, because there are many things that are not regulated but are done by CPI and SKK Migas so that the transfer of management runs well. One of them is the preparation of the 2020 AMDAL/IEA document. 

"As a resource person from the Ministry of Environment and Forestry in the preparation of upstream oil and gas, I am very proud of the proposed AMDAL," he said.

"Governance in the transitional period must be improved and currently is outside the realm of SKK Migas. This is the right momentum so that the authority of SKK Migas in terms of the transition to the end of the CA can be lifted so that the future transition can be carried out better, "continued Mukhtasor.

Importance of Investment

    The speakers saw that efforts to increase production at the Rokan WK could be realized if there was sufficient investment needed. Oil and gas practitioner, Hadi Ismoyo conveyed, it takes a strong commitment from Pertamina and the government, to invest tens of millions of dollars because the activities carried out must be quite massive.

    Gadjah Mada University energy economy observer, Fahmi Rady hopes that Pertamina will focus on concentrating its strength in WK Rokan, whose potential is still very large and the results are certain. Meanwhile, another upstream oil and gas observer, Abdul Muin, added that the way to increase oil and gas production in WK Rokan is through aggressive investment and must be realized according to commitments.

"So, if Pertamina has difficulties related to investment costs, it is better to open up options to cooperate with other companies. This is commonly done by the upstream oil and gas industry because they will also share risks and collaborate according to their respective advantages, "concluded Muin.

Source: Press release SKK Migas, Tuesday, Nov 24, 2020

21 EOR Projects will be Upstream Until 2030

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) plans 21 enhanced oil recovery (EOR) projects to start operating until 2030. EOR is planned to support the achievement of the oil production target of 1 million barrels per day (BPD)  by 2030.

Blogger Agus Purnomo in SKK Migas

Head of SKK Dwi Soetjipto said, if there is no effort, national oil production will continue to decline in the future. In order to achieve the target of 1 million bpd by 2030, a number of strategies have been formulated by his party, namely accelerating the transformation from reserves to production, exploration, and implementation of EOR activities.

Dwi Soetjipto

"A total of 21 EOR projects using polymers, surfactants, and CO2, are planned to start onstream until 2030," he said.

He explained that his party had identified which oil and gas fields this EOR activity would apply. In SKK Migas data, there are 42 oil and gas fields that are candidates for this EOR activity. Unfortunately, the implementing agency for upstream oil and gas activities did not specify which fields would start producing additional production by 2030.

"We have identified which arenas [for EOR], and what the reserves and production are like," said Dwi.

The 42 oil and gas fields are Minas, Melibur, Bangko, Medium Water, Widuri, Bajubang, Kenali Asam, Batang, Tanjung, Bekasap, Guruh, Ramba, Jatibarang, Zelda, Eman, Walio, and Duri Ring fields. Apart from that, there were Krisna, Rantau, Limau PQ, Tanjung Tiga Barat, Zulu, Pedada, Rantau Bais, Jirak, Balam South, Tempino, Farmers, Handil, Gemah, Kaji May, Prosperous, Kulin, Zamrud, and Raja fields.

Referring to SKK Migas data, the EOR project is targeted to start increasing national oil production in 2024 with two projects starting onstream. Furthermore, in 2025 and 2027, two projects each are targeted to start producing. After that, a total of 6 EOR projects are planned to start operating in 2028, 5 projects in 2029, and 4 projects in 2030.

Meanwhile, the rest of the EOR projects are scheduled to start production in 2031-2040. In detail, as many as 8 EOR projects will operate in 2031, 5 projects in 2032, 3 projects each in 2033-2034, 2 projects in 2035, 1 project in 2036, 4 projects in 2037, 1 project in 2038, and finally 4 projects by 2040.

Secretary-General of the Indonesian Petroleum Engineering Experts Association (IATMI) Hadi Ismoyo said, there is indeed the potential for additional oil production from EOR activities. However, not only technical aspects but the government must also pay attention to economic aspects so that additional production can be realized.

"The government must open up and provide extraordinary support, including from the fiscal side," he said.

The Rokan Block Chevron

Rokan Block

Dwi added, one of the large potential additional oil production from EOR is expected to come from the Minas Field, Rokan Block. Referring to SKK Migas data, Minas Field will become the backbone of national oil production with production reaching 52 thousand bpd in 2030.

"We hope that EOR Minas can be executed. We depend on Pertamina and partners to make it happen, "he said.

Hadi added that it should be focused on fields that have the potential to generate large amounts of additional oil production, one of which is the field in the Rokan Block. This is because EOR activities are not necessarily economical if they are applied in small fields.

"In Rokan, the original oil base is 8.5 billion barrels. If we talk about 10% recovery, we will already get 850 million barrels, ”he said.

PT Pertamina Hulu Energi (PHE)

Director of Strategic Planning and Business Development of PT Pertamina Hulu Energi (PHE) John H Simamora said, in the EOR planning by SKK Migas, the Rokan Block was included in it. 

PT Chevron Pacific Indonesia 

    He has entrusted the government and SKK Migas with regard to the EOR project, primarily for the implementation of the EOR test which has been carried out by PT Chevron Pacific Indonesia as the current Rokan Block operator. However, his party is concerned about the economic aspects of the EOR project in the Rokan Block if you see the current oil price developments.

"If the price of oil is still like today, I myself don't think we can run EOR economically," he said.

However, this could be different if the government had other perspectives in implementing this EOR. One of them, if the government will provide incentives to increase the economy of the EOR project.

"But primarily, we want oil prices to improve," said John.

When signing the Rokan Block contract, the implementation of EOR activities was one of Pertamina's commitments. This is as stated in the Decree of the Minister of Energy and Mineral Resources 1923K / 10 / MEM / 2018. Some of these activities are the US $ 4 million EOR study, US $ 247 million stage-1 CEOR 7 pattern, and the US $ 88.6 million stage-1 steam flood Kulin or Rantau Bais.

Investor Daily, Page-10, Monday, Nov 23, 2020

The IDD project is targeted to start in 2021

 

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) targets the Indonesia Deepwater Development (IDD) project to start rolling again next year. 

Blooger Agus Purnomo in SKK Migas

    This follows the transfer of management of the IDD Project to Eni Indonesia which is expected to be completed by the end of this year.

Eni Indonesia

Head of SKK Migas Dwi Soetjipto said Chevron Indonesia, as the operator of the IDD Project, is still in the discussion stage regarding the transfer of participating share ownership to Eni Indonesia. The administrative process for the transfer of share ownership and management rights is expected to be completed this year.

Dwi Soetjipto

"So we hope that next year there will be changes to the plan of development / POD proposed after being managed by Eni," he said.

He explained that the POD changes were needed because Eni had managed two oil and gas blocks located near the IDD Project, namely the Muara Bakau and East Sepinggan blocks. Thus, the development of the IDD Project can later be integrated with the facilities that Eni already has in the two blocks. 

the IDD Project Chevron

    One of them is the utilization of the floating production unit / FPU Jangkrik block facility. So, IDD development will change from Chevron's plan or POD, ”said Dwi.

Working Area of Chevron

Furthermore, with the integration of these facilities, it is hoped that the development of the IDD Project can be faster and more efficient.

"We are optimistic that the development of IDD will be better and more efficient because Eni already has facilities. We are still targeting to start onstream in 2025, "he added.

Referring to SKK Migas data, the IDD project is targeted to start operating in the fourth quarter of 2025. 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 project investment is estimated at the US $ 6.98 billion. This IDD project combines two oil and gas fields, namely Gendalo Field, Ganal Block, and Gehem, Rapak Block.

Ganal Field by ENI

Dwi said that the government supports the extension of the production sharing contract / PSC for oil and gas blocks that are included in the IDD Project, namely the Meeting Block and Ganal. This is because the Rapak Block contract will end in 2027 and the Ganal 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 currently 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.

Investor Daily, Page-10, Friday, Nov 20, 2020

Pertamina and Chevron Still Discussing EOR

 

It seems that the increase in production of the Rokan Block using the Enhance Oil Recovery (EOR) method cannot be realized smoothly, because PT Chevron Pacific Indonesia is reluctant to provide all EOR formulas to PT Pertamina Hulu Rokan so that production can be more than 170,000 barrels per day.

PT Chevron Pacific Indonesia

Secretary-General of the National Energy Council (DEN) Djoko Siswanto said that in order for PT Pertamina to carry out EOR it would need four formulas, but Chevron was reluctant to provide one other formula.

Chevron

"There are four formulas. Chevron has provided three formulas, one other formula is not given, he said.

The management of Chevron Pacific Indonesia has not yet answered confirmation regarding the progress of the transition to managing the Rokan Block and the EOR formula to increase the production of the block. 

the Rokan Block 

    Meanwhile, PT Pertamina (Persero) Senior Vice President for Corporate Communication & Investor Relations, Agus Suprijanto, admitted that until now Pertamina is still discussing with Chevron about EOR in the Rokan Block. However, he could not mention the progress of Pertamina's discussion with Chevron.

"For discussion material with Chevron, we have internal discussions, it cannot be shared yet," said Agus.

the Rokan Work Area (WK)

In general, the work program for 2021 in the Rokan Block is still being discussed with SKK Migas. To be sure, Agus ensures that the transition process for managing the Rokan Work Area (WK) will continue as planned. Pertamina Hulu Rokan will become the Cooperation Contract Contractor (KKKS) managing the WK Rokan as of August 9, 2021.

"Regarding the program details, we will share if there are official results," said Agus.

He also said that Pertamina would still work on the EOR scheme. Although he did not disclose the significant impact of using EOR to increase production in the Rokan Block, Agus assured Pertamina that it already had calculations. Agus said that currently discussions related to the economy were still ongoing.

"The calculation is there. "We are currently in discussions regarding various economic alternatives with the government," said Agus.

Kontan, Page-12, Monday, Nov 16, 2020

Eni Strong Candidates to Manage IDD Block

The Special Task Force for Upstream Oil and Gas (SKK Migas) said that the transition to management of the deep-sea gas project or Indonesia Deep Water Development (IDD) is entering its final stage. 

Chevron Pacific Indonesia

    SKK Migas confirmed that the transfer of IDD Block management from Chevron Pacific Indonesia to Eni, who is also one of the IDD Block owners, will take place on a business-to-business (B to B) basis and can be completed by the end of this year. 

    Head of SKK Migas, Dwi Soetjipto, confirmed that currently, the discussion of switching the IDD Block operator has entered the final stage.

Dwi Soetjipto

"Eni is a candidate to replace Chevron. Being finalized, God willing, at the end of this year we are targeting a clean "Dwi said at the Ministry of Energy and Mineral Resources.

The finalization is internal between Chevron and Eni. After it was confirmed that it would not continue the management of the Rokan Block, Chevron Pacific Indonesia also decided not to continue the phase II development of the IDD Block.

One of the reasons for Chevron's reluctance to continue with the gas project was that the second phase development of the IDD Block was not included in the global portfolio of the US oil and gas company. 

the IDD Block

    Currently, the IDD project consortium consists of 62% ownership of Chevron, the remaining 20% ​​is held by Eni and 18% by Sinopec. Eni is considered to be a strong candidate to continue the development of phase II of IDD because investment costs can potentially be reduced. This is because this Italian oil and gas company already has facilities that can be integrated.

Sonitha Poernomo

Previously, PT Chevron Pacific Indonesia's Corporate Communication Manager, Sonitha Poernomo, said that the transition discussion process was still ongoing.

Blogger Agus Purnomo in SKK Migas

"We are still working 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-10, Saturday, Nov 7, 2020

SKK Migas targets the end of November

 

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) targets that drilling in the Rokan Block will begin next month. SKK Migas Operations Deputy Julius Wiratno said that currently, PT Chevron Pacific Indonesia (CPI) is still converting two units of rigs to be used for drilling.

Blogger Agus Purnomo in SKK Migas

In addition, CPI has procured several service jobs that support drilling activities. Julius said SKK Migas and CPI continued to make efforts so that the drilling activity could begin in November according to the agreement.

PT Chevron Pacific Indonesia (CPI)

"The target is the end of November," he said.

Sonita Purnomo

When confirmed, the CPI was still reluctant to explain the details of drilling preparations that will begin next month. CPI Corporate Communication Sonita Purnomo said that her agency continues to have intensive discussions with SKK Migas before starting the drilling.

"PT CPI continues to have intensive discussions with SKK Migas to finalize the detailed implementation of the heads of agreement to support the commencement of drilling activities," She said.

the Rokan block by Chevron

SKK Migas and CPI have agreed on ahead of agreement (HoA) on September 28, 2020, for investment in the transition period for the Rokan work area (WK). CPI will remain investing in 2020-2021. This investment is an effort to increase production in the Rokan block working area during the transition period before being transferred to the management of PT Pertamina (Persero) in August 2021.

Bisnis Indonesia, Page-5, Saturday, Oct 31, 2020

Drilling of the Rokan Block well has the potential to be delayed to December

 

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that the drilling of wells in the Rokan Block will be carried out in late November or early December. Currently, rig procurement is underway.

Blogger Agus Purnomo In SKK Migas

    Deputy for Operations of SKK Migas Julius Wiratno said that the government and PT Chevron Pacific Indonesia (CPI) had signed the main agreement for the implementation of operations during the transition period of the Rokan Block. Currently, Chevron is preparing a rig that will be used to drill this well, along with its supporting service contracts.

the Rokan Block

"At the end of November or early December, drilling will be carried out in the Rokan Block," he said.

PT Chevron Pacific Indonesia (CPI)

    According to Julus Wiratno, the rigs that are currently available are rigs that are usually used to workover wells. As a result, Chevron needed time to convert the rig to be used for infill well drilling. However, as planned, 11 wells will be drilled in 2020.

"After that in 2021, about 6 rigs will be added to carry out drilling. After that, PT Pertamina (Persero) will continue in August 2021, "added Julius.

Dwi Soetjipto

    Head of SKK Migas Dwi Soetjipto explained that the total investment for drilling wells in the Rokan Block in 2020-2021 is around the US $ 154 million. In detail, Chevron will drill 11 wells in 2020 and 107 wells in 2021. This year, the annual average additional oil production from this drilling is only 500 barrels per day (BPD).

"But in 2021, additional production will reach an average of 5 thousand bpd," he said.

    He emphasized that his party is focused on overseeing the implementation of the transfer of management of the Rokan Block from Chevron Indonesia to Pertamina as well as possible. One of them is the process of procuring goods and services, in which out of the 19 procurement packages needed, 10 packages have been contracted.

"SKK Migas will conduct supervision," said Dwi.

    Regarding Pertamina's potential partners in managing the Rokan Block after August 8, 2021, Dwi did not answer because it was Pertamina's authority. However, until now, he admitted that he had not received a report from Pertamina regarding his potential partner.

"We focus on securing the stage when Pertamina enters, with a better level from the production side," he said.

Arifin Tasrif 

    Previously, Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif reminded Chevron and SKK Migas to realize the provisions agreed upon in the HoA. This is because the implementation of this provision will have an impact on efforts to achieve the national oil and gas production target next year according to the 2021 APBN macro agreement.

"We will continue to monitor its implementation periodically to ensure the commitment of all parties goes according to the agreement, especially the certainty of the implementation of drilling activities which will start in November 2020," said Arifin.

    This year, the Rokan Block is targeted to produce 170,000 bpd of oil. Until the end of last June, the realization of this block's oil production was recorded to have exceeded the target, reaching 176,298 bpd. However, this realization fell when compared to production in 2019 which reached 190,131 thousand bpd. The Rokan Block is the second-largest oil producer in Indonesia.

Investor Daily, Page-10, Friday, Oct 30, 2020