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.

Existing Power Supply Continued 3 Years

    The existing power plant in the Rokan Block is certain to continue operating for the next 3 years, even though there is a transfer of operator management in the working area.

Blogger Agus Purnomo in SKK MIGAS

    Deputy Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Fatar Yani said electricity was one of the nine important elements in the process of transferring management of the Rokan Block from PT Chevron Pacific Indonesia to PT Pertamina Hulu Rokan (PHR).

PT Chevron Pacific Indonesia

"Of course it will continue even though there are other parties who enter. What is clear, 3 years is still going on to continue to sustain, "he said.

    The electricity and steam supply in the Rokan Block is currently produced by a steam gas power plant (PLTGU) operated by PT Mandau Cipta Tenaga Nusantara (MCTN) which is directly owned by Chevron Standart Ltd.

    Fatar said MCTN will carry out a business-to-business mechanism with new investors. He hopes that the process will not interfere with the transfer of management in the Rokan Block.

the Rokan Block

    Director of Commerce and Customer Management of PT PLN (Persero) Bob Sariel said that his party had signed an MoU for the supply of electricity and steam with Pertamina Hulu Rokan which will take effect in August 2021.

    Bob explained that in supplying electricity and steam for the Rokan Block, PLN divides it into two stages, namely the transition period and the permanent period. The transition period will last for 3 years starting from August 2021 to August 2024.

"During this transitional period, PLN will manage the existing power plants that currently have powered the Rokan work area," he explained. 

Bisnis Indonesia, Page-4, Wednesday, April 28, 2021

The Lifting Target of Petroleum Is More Challenging

 

    The pandemic has made the target of 1 million barrels per day of natural oil production by 2030 even more challenging. Apart from exploration, several other strategies will be taken to increase production.

    Until the end of March 2021, the realization of ready-to-sell production or oil lifting was 676,200 barrels per day or still lower than the State Budget (APBN) target of 705,000 barrels per day. The Covid-19 pandemic in 2020 has caused investment in upstream oil and gas to decline drastically and the number of wells drilled. This condition makes the production target of 1 million barrels per day in 2030 even more challenging.

    Likewise, natural gas lifting, which in the first quarter of 2021 was realized as much as 5,539 million standard cubic feet per day (MMSCFD). In the APBN, the target for natural gas lifting is 5,638 MMSCFD. However, natural gas lifting is currently still higher than the realization in 2020 of 5,462 MMSCFD.

Blogger Agus Purnomo in SKK Migas

    Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto, Monday (26/4/2021), said that the decline in oil lifting in the first quarter of 2021 was influenced by the Covid-19 pandemic since last year. Until the end of 2020, investment in the upstream oil and gas sector dropped dramatically and resulted in low Wells drilling to boost production. Last year, there were 240 wells drilled, and this year 616 wells were planned.

"From year to year, the realization of oil lifting has always been lower than the target of the APBN. This year, we strive so that lifting is not much different from last year's realization. The low investment in 2020 due to the Covid-19 pandemic has resulted in a drastic decrease in production, "Dwi said in a press conference on the Upstream Oil and Gas Performance Exposure for the first quarter of 2021 in Jakarta.

    Dwi added, to reach the production target of 1 million barrels per day in 2030, apart from intensifying exploration to find new reserves, several strategies were taken to increase production. The strategy is to optimize production in existing fields, apply enhanced oil recovery (EOR) methods, and accelerate the status of reserves to production.

the Cepu Block

    SKK Migas noted that the Cepu Block in East Java, which is operated by ExxonMobil Cepu Ltd (EMCL), is currently the largest contributor to oil production in Indonesia, which is 213,000 barrels per day. 

the Rokan Block Chevron in Riau

    Next is the Rokan Block in Riau, which produces 165,000 barrels per day. The operation period of the Rokan Block by PT Chevron Pacific Indonesia (PCI) will end in August and the next management will be handed over to PT Pertamina (Persero).

PT Chevron Pacific Indonesia (PCI)

    From the investment side, SKK Migas targets this year's realization to be 12.4 billion US dollars, higher than last year's realization of 10.5 billion US dollars. Until the first quarter of 2021, the realization of upstream oil and gas investment was the US $ 2.4 billion. The state revenue for the same period was 3.29 billion US dollars or 45 percent of the target of 7.28 billion US dollars.

Exploration

    Separately, the Executive Director of the ReforMiner Institute, Komaidi Notonegoro, said that massive exploration is the most important way to obtain new sources of oil and gas reserves in Indonesia. Moreover, the government has repeatedly stated that out of 128 basins in Indonesia, as many as 70 basins have not been studied at all. Apart from that, the government must also be able to create an attractive upstream oil and gas investment climate for investors.

"No more changes in contracts or regulations. This concerns the certainty of trying. If this still happens, investors will rethink investing in Indonesia and it is possible for them to choose other countries that are more attractive, "he said.

    At the end of 2019, Pertamina through its subsidiary, PT Elnusa Tbk, started a two-dimensional seismic survey to find oil and gas reserves in Indonesian waters. This survey, which crosses the sea along 30,000 kilometers, is the largest survey in the Asia Pacific region in the last 10 years. The survey started from the waters around Bangka Island, Bangka Belitung, to the waters around Seram Island, Maluku.

    According to the Head of the SKK Migas Exploration Planning Division Shinta Damayanti, the exploration results by Pertamina are still being evaluated. The government wants the evaluation data to be made public and is scheduled to be known in July. It is stated that from the results of the exploration there are several prospective areas (there are oil and gas reserves).

"Pertamina has conducted a joint study with other parties in East Java and it is estimated that (in that area) will become a new upstream oil and gas working area. The data from the seismic survey will be useful for investors, "said Shinta.

Kompas, Page-9, Tuesday, April 27, 2021

the Confusion over Management of the Rokan Block

 

    The government, in this case, the Ministry of Energy and Mineral Resources (ESDM) and SKK Migas, are asked to immediately step in to resolve a number of issues that remain in the process of transitioning the Rokan Block from PT Chevron Pacific Indonesia (CPI) to Pertamina Hulu Rokan. The reason is, according to the management transfer contract, it must be carried out on August 9.

PT Chevron Pacific Indonesia (CPI)

"Transfer of management will be carried out on August 9, 2021. However, it leaves many problems. The EOR issue has not yet been resolved, but the electricity problem has reappeared which will affect the transition process. We ask the Government's firmness to deal with this immediately. The state should not be defeated by private corporations that have the potential to harm the state for their activities so far, "said Executive Director of Energy Watch Mamit Setiawan.

    Mamit even asked law enforcement officials to intervene considering the potential crimes that could harm the state during the electricity and steam leasing process which has been done by Chevron Pacific Indonesia with PT Mandau Cipta Tenaga Nusantara (MCTN).

Chevron

"Chevron's footprint in Indonesia must be investigated until it is clear before the transition process is carried out. Don't let the Rokan Block electricity become scraped (catch a cold), "he joked.

    As is known, Pertamina, through their subsidiary Pertamina Hulu Rokan (PHR) on February 1, 2021, has signed a power and steam sale and purchase agreement with PLN.

"PLN itself has proposed 2 options related to this agreement, namely in the short term until 2024 they have to build transmission and distribution lines," he said.

    This is because so far Chevron has rented electricity and steam from PT Mandau Cipta Tenaga Nusantara (MCTN) since 1998. Ironically, MCTN's ownership is 95% owned by Chevron Standard Limited and 5% by Nusagalih Nusantara. So that it is pointed out that Chevron Pacific Indonesia has carried out transfer pricing since 2008.

"This was disclosed by the Supreme Audit Agency (BPK) in 2006 where Chevron asked the government to return the cost of renting electricity and steam from the government since collaborating with MCTN," he said.

    This process, said Mamit, has the potential to cost the state US $ 210 million. Based on information from SKK Migas, Chevron pays the US $ 80 million annually for electricity and steam leases to MCTN and this is included in the fees that are billed (EOR) back to the government.

"This proves that MCTN's assets must be returned to the state because the government has paid all the investment costs made to build MCTN's electricity and steam facilities," he said.

Investor Daily, Page-10, Monday, April 26, 2021

Instead of Manage Challenging Rokan Blocks

    The transfer of management of the Rokan Block from PT Chevron Pacific Indonesia to PT Pertamina (Persero) left a problem with the electricity supply. With crude oil production of 160,000 barrels per day, the Rokan Block requires an electricity supply of up to 400 megawatts and steam of 335,000 standard barrels per day. It is feared that the problem will affect oil production when the block in Riau was managed by Pertamina.

Blogger Agus Purnomo in SKK Migas

    According to Fatar Yani Abdurrahman, Deputy Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), the electricity supply in the Rokan Block is the backbone of the block's production operations. 

    So far, the supply of electricity and steam has been managed by PT Mandau Cipta Tenaga Nusantara (MCTN), which has a contract with Chevron. The company operates a Gas and Steam Power Plant (PLTGU) with a capacity of 300 MW.

"SKK Migas knows that the plant is being tendered and sold to the highest bidder. We have also discussed with Chevron that the most reliable electricity manager in Indonesia is only PT Perusahaan Listrik Negara (Persero). We'll just wait for the solution, "said Fatar in the webinar" Safeguarding State Assets and Sustainability of Electricity Supply in the Rokan Block ".

the Rokan Block by Chevron

    The PLTGU in the Rokan Block has become a polemic, regarding its status as a state asset or not a state asset, in a cooperation contract scheme based on cost recovery.

    John Simamora, Director of Strategic Planning and Business Development at PT Pertamina Hulu Energi (PHE), said that his party had agreed to hand over the electricity supply in the Rokan Block to PLN. 

PT Perusahaan Listrik Negara (Persero)

    However, if PLN is not ready to supply electricity until the limit of handing over management of the Rokan Block to Pertamina, another option is to extend the power supply contract with MCTN.

    Executive Vice President of Corporate Communications and PLN CSR Agung Murdifi, through an official statement, stated that PLN is very ready to meet the electricity needs of the Rokan Block. The Sumatra electricity system has a power reserve of 2,800 MW.

Kompas, Page-10, Friday,  April 9, 2021

PLN Is Judged as Most Eligible to Manage Electricity Supply in the Rokan Block

 

    After the expiration of the PT Chevron Pacific Indonesia (CPI) contract in early August 2021, the electricity supply business in Rokan Block, Riau Province, is deemed to be carried out by PT PLN (Persero), as the state-owned electricity company as well as the mandate holder of the Decree of the Minister of Energy and Mineral Resources Number 634 12/20 / 600.3 / 201.

PT Chevron Pacific Indonesia (CPI)

"According to Ministerial Decree No. 634, no business entity other than PLN has the right or authority to carry out electricity supply business activities in the Rokan Block," said PLN Commercial and Customer Service Director Bob Sariel, while speaking at a webinar entitled Safeguarding State Assets and Sustainability of Electricity Supply. in the Rokan Block organized by the Energy and Mining Editor Society (E2S).

PT PLN (Persero)

    According to Bob, the provision of electricity is very important in supporting the efficiency and adequacy of electricity nationally, every business entity wishing to participate in the electricity supply business should always be based on cooperation with PLN as a provider of electricity throughout Indonesia.

"For PLN, electrifying the Rokan Block is not about profit but about carrying out national duties," he said.

    The majority of the electricity supply in the Rokan Block comes from the Gas and Steam Power Plant (PLTGU) managed by PT Mandau Cipta Tenaga Nusantara (MCTN) whose majority shares are owned by Chevron Standard Ltd (CSL).

    Chevron's electricity and steam agreement with MCTN, whose majority shares are owned by CSL as a Chevron Holding group, is embodied in the form of an Energy Service Agreement (ESA) with a return on investment in the form of a Capacity Fee. The contract period starts from 2000 to August 8, 2021, where the revenue is estimated to have exceeded the return on investment so that the interests of shareholders have been fulfilled so far.

the Rokan Block Chevron

    Bob explained, after the end of the Rokan Block management contract by CPI, the ESA between CPI and MCTN also ended. CSL, as the majority shareholder of MCTN, should not conduct an open bid for the sale of MCTN shares using the services of JP Morgan's financial consultant. Because the management of the Rokan Block by CPI ends in August 2021.

    CSL as the majority shareholder of MCTN whose agreement with CPI also ends in August 2021 should communicate conducive to electricity and steam providers appointed by Pertamina in providing reliable and efficient electricity and steam for the long term along with the management of the Rokan Block which switches to Pertamina starting August 9, 2021.

PT Pertamina Hulu Rokan (PHR) Working Area

    Bob said PLN is ready to carry out an important mandate to support the management of the Rokan Block by PT Pertamina Hulu Rokan (PHR), a subsidiary of PT Pertamina Hulu Energi, to produce and produce as much as possible for the country. PLN is also ready to conduct business-to-business negotiations with Chevron regarding the power plant in the Rokan Block.

"B2B problem, yes we do, of course, this must be based on fairness. What is being offered must be something that is reasonable, "said Bob.

    According to him, PLN is capable of managing the CSL generator in Rokan. Moreover, PLN is accustomed to using any technology for generators.

"Like the PLTGU in Tanjung Priok and Muara Karang, the engine is the same as in the Rokan block," he said.

    Fataryani Abdurahman, Deputy Head of SKK Migas, said that SKK Migas has sent a letter to Chevron regarding the power plant in Rokan.

"We said that the profits have been many, for 20 years you PT Chevron Pacific Indonesia (CPI) have got a lot of benefits. But sometimes we forget that they also maintain, "he said.

    According to Fatar, electricity is the backbone of operations in the Rokan Block. Because the PLTGU was designed in the 90s to implement Steamflood Enhanced Oil Recovery (EOR) technology which requires a large electricity supply.

Investor Daily, Page-10, Friday,  April 9, 2021

Chevron Electric Tenders Too High

 

    PT PLN (Persero) asked Chevron to conduct an open tender for the Rokan Block electric generator, including by not setting an auction value of US $ 300 million because it was considered too high.

the Rokan Block

    Director of Commerce and Customer Management of PLN, Bob Saril, said that the business to business process related to the auction of the 300 megawatt (MW) power plant must be based on justice. According to him, the price set by Chevron is too high, so the pricing for the assets must be based on a fair assessment.

"The purchase value alone was US $ 190 million 20 years ago. We want to sell US $ 300 million, ”he said in the webinar on Safeguarding State Assets and the Sustainability of Electricity Supply in the Rokan Block.

the Rokan Block Working Area

    Bob also regretted that Chevron's move to hold the tender in the United States had prevented the process from being open. PLN is working with a number of related institutions to calculate the fair value of the asset which Chevron owns 95% of its shares.

“The tender process must be carried out fairly, but it seems that the tender process is not open. Intentionally covered up to find the highest value "he said.

    According to him, in the authority to supply electricity in the Rokan Block, PLN refers to the Minister of Energy and Mineral Resources Regulation No. 28 of 2021 and the Minister of Energy and Mineral Resources Regulation No. 30 of 2018. The Rokan Block area is part of the PLN electricity sales business area. For this reason, the supply of electricity and steam in the Rokan Block must be handed over to PLN as the party responsible for generating electricity. Other business entities can support PLN for other supporting services in carrying out these national duties.

PT PLN (Persero)

"For PLN, electrifying the Rokan Block is not about profit but by carrying out national duties," he said.

    On the other hand, PT Pertamina (Persero) will also prepare options if the acquisition process for Chevron's power plant in the Rokan Block cannot be completed during the transition period of management transfer.

    Pertamina's Upstream Subholding Director of Strategic Planning and Business Development John Simamora said that his party had partnered with PLN by signing a memorandum of understanding between the two parties to ensure the supply of electricity in the Rokan Block. 

    However, if the process of acquiring Chevron's power plant which is operated by PT Mandau Cipta Tenaga Nusantara has not been completed by the time of transfer of management on August 9, 2021, Pertamina must take steps so that the production process is not disrupted.

"We prioritize production, so the best step is if the latest PLN data cannot be taken over on August 9, we will of course mirror the contract until PLN succeeds in completing the process that is currently happening," he said.

    With regard to the selling price of electricity, John said that the tariff that PLN will apply will not be much different from the current price. In fact, it is possible that PLN's price will be more competitive.

"Because it could be that the actual costs so far shouldn't have been that much."

Blogger Agus Purnomo in SKK Migas

    Seeing the problems in the Rokan Block, Deputy Head of SKK Migas Fatar Yani Abdurahman said the main priority during the transfer of management of the block was to maintain production. 

    According to him, the acquisition process takes a long time because it could be a year to two years. For this reason, there are a number of options so that the demand for electricity and steam in the Rokan Block can be guaranteed during the operator shift period.

    Several viable options include mirroring contracts or forming a consortium with the old operator. Apart from that, the state could also ask for these assets to be transferred to PT Pertamina Hulu Rokan (PHR) or a regionally owned business entity.

    Furthermore, Fatar added that as of March 2021, out of the target of drilling 192 wells included in Chevron's investment, the realization had reached 28 wells. Meanwhile, for the workover activities of the target of 10 activities, 3 workovers have been realized. Reflecting on the process of transferring management of the Mahakam Block, SKK Migas prepares anticipatory steps to maintain production rates in the Rokan Block.

    In this regard, SKK Migas Operations Deputy Julius Wiratno said that his party would be quicker to start drilling activities so that they could reduce the rate of decline in production when the confusion shifted to PT Pertamina Hulu Rokan (PHR). Development drilling is also ongoing in addition to the use of Enhanced Oil Recovery (EOR).

Bisnis Indonesia, Page-3, Friday,  April 9, 2021

Oil and Gas Glory Relay Burden

 

    Reflecting on the history of the Rokan Block, Indonesia may have to thank the four people sent by the Standard Oil Company of California (Socal) 97 years ago to undertake a geological expedition to the island of Sumatra. The expedition was led by E.M. Butterworth with the geological group of which R.N. Nelson, M.M. Orr, and E.R. Wall. Exploration was carried out in various areas, including Kalimantan, neighboring small islands, and Sumatra, particularly the Aceh region.

    The expedition is Socal's first attempt to acquire land to be used for oil exploration in the eastern hemisphere of the world. During the reign of the Dutch East Indies, to be precise in 1930, Socal together with the Netherlands formed the Nederlandsche Pacific Petroleum Maatschappij (NPPM) which was the forerunner of PT Chevron Pacific Indonesia (CPI). At that time, seismic exploration was still in its early stages. NPPM geologists and local workers walk along forest streams looking for exposed bedrock.

PT Chevron Pacific Indonesia (CPI)

    Six years later, to be precise, in 1936 Socal together with the Texas Oil Company (Texaco) founded the California Texas Petroleum Corporation or commonly known as Caltex. 

the Rokan Block by Chevron

    However, finding petroleum resources in the Rokan Block is not easy. It took 15 years from 1924 to 1941 to find the area of ​​crude oil reserves in the Duri Field. With billions of barrels of oil below ground level, Duri Field was the largest oil-deposited field in Southeast Asia until the discovery of the Minas Field in Southeast Asia in late 1944.

    The discovery also made Indonesia the largest crude oil producer in Southeast Asia at that time. The Pacific oil company Caltex or Caltex Pacific Oil Company (CPOC) then developed the giant Minas Field to reach 15,000 barrels of oil a day at the start of its production until 1952, the first shipment of oil from the Minas Field was made. After more than half a century, Chevron has produced more than 12 billion barrels of oil from onshore fields in Riau Province and offshore fields in East Kalimantan Province.

Chevron

PERTAMINA ERA

    Chevron's heyday in Indonesia by becoming the operator of the Rokan Block is coming to an end. In 2018, the government decided to provide management of the Rokan Block to PT Pertamina (Persero) starting in August 2021. The decision was taken after Pertamina's proposal was more attractive than the proposal Chevron offered to the government. 

    However, the government also emphasized that the transition period could be carried out as soon as possible. At that time, the Head of the Communication Bureau, Public Information Services and Cooperation of the Ministry of Energy and Mineral Resources (EMR/ESDM), Agung Pribadi said that after learning from the experience of the Mahakam Block transition, discussions and preparations for the transition to the Rokan Block were carried out earlier, but were still effective.

"Collaboration will be intensified starting 2019," he said.

    In the approved proposal, it was stated that Pertamina would give a signature bonus to the government worth the US $ 784 million. In addition, there is a firm work commitment of US $ 500 million. Pertamina also promised state revenue from the management of the Rokan Block to reach Rp. 850 trillion over the next 20 years.

    President Director of Pertamina Hulu Rokan R. P. Yudantoro said that his party had prepared a long-term program to maintain production and curb the rate of decline in oil. At least 44 development wells will be drilled in 2021 after the block is transferred to Pertamina. In addition, another 40 additional development wells are planned in accordance with discussions with SKK Migas.

    Chevron is still being asked by the government to play an active role in the transition process. As a result, the company agreed to continue investing in the Rokan Block during the transfer of management. 

the Rokan Block Working Area

    In December 2020, Chevron also started the first drilling in the Rokan Block after 2 years. In the latest development, Chevron Pacific Indonesia Corporate Communication Manager Sonitha Poernomo stated that he had started sharing Rokan Block data with Pertamina. 

Sonitha Poernomo

    Sonitha added that Chevron shared the data with PT Pertamina Hulu Rokan (PHR) as the next Rokan Block operator so that the transition process would run smoothly.

"We hope that the process of transferring the management of the Rokan Block can become one of the points of reference for the transfer of other oil and gas working areas in Indonesia," said Sonitha.

    From August 2020 to March 2021, Chevron has submitted all data included in the termination checklist to SKK Migas. The data includes those related to geology and geophysics, licensing, standard operating procedures (SOP), production facilities, land, goods and services contracts, human resources, and community development programs. 

    In the end, Chevron's trail in the Rokan Block, which is full of history, is only 4 months away. Furthermore, will Pertamina be able to continue the baton that has been held by Chevron for almost a century and keep the promises made previously? Only time will tell.

Bisnis Indonesia, Page-4, Monday,  March 29, 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

Chevron Delivers Rokan Block Data to the Government

 

    Ahead of the transfer of management, PT Chevron Pacific Indonesia (CPI) as the current operator of the Rokan Block has completed a large number of asset data collection and submitted production, exploration, and operational activity support data to the Government of Indonesia through the Special Task Force for Upstream Oil and Gas Business Activities. (SKK Migas). Chevron has also started sharing this data with PT Pertamina Hulu Rokan (PHR) as the next Rokan Block operator.

PT Chevron Pacific Indonesia (CPI)

"Our company is committed to carrying out the transition process of the Rokan Block in a safe, reliable, and smooth manner so that this block continues to provide optimal benefits for the country and the people of Indonesia. 

    In the future, we hope that the process of transferring the management of the Rokan Block can become one of the points of reference for the transfer of other oil and gas working areas in Indonesia, "said PT CPI's Corporate Communication Manager Sonitha Poernomo.

Sonitha Poernomo

    From August 2020 until now, PT CPI has submitted all data included in the termination checklist to SKK Migas. The data includes those related to geology and geophysics, licensing, standard operating procedures (SOP), production facilities, land, goods and services contracts, human resources, and community development programs. 

Blogger Agus Purnomo in SKK Migas

    Chevron has completed submitting the data ahead of schedule to support a smooth transition process. Chevron also coordinates intensively with SKK Migas and PHR to discuss various technical aspects of the transition process. Chevron is also trying to maintain the Rokan Block oil and gas production.

"Last year we were still able to meet the production target set by the Government," said Sonitha.

    In addition, Chevron has also started an incremental drilling program at the end of December 2020 in accordance with the Heads of Agreement (HoA) with SKK Migas which was signed in September last year.

the Rokan Block

"The HOA is critical to slowing down the rate of decline in natural production before the end of the Rokan Block management transfer period and will continue to meet Indonesia's energy needs," said Sonitha.

    President Director of PT Pertamina Hulu Energi (PHE) Budiman Parhusip is committed to transferring employment to Chevron workers in the Rokan Block with conditions that have been mutually agreed upon with related parties. In addition, his party has also collaborated with several universities in Riau, including for Social and Environmental Responsibility (TJSL) activities.

    The TJSL program will be prioritized to improve the independence of the Riau people in the fields of education, health, economy, and environmental preservation. Planning for the TJSL program also involves local governments.

"As for the Local Business Development (LBD) program which is currently being built and implemented by the CPI, it will first be discussed further.

    Coordination with CPI is needed to obtain 260 LDB contract schemes and data before the socialization is carried out, "said Budiman.

Investor Daily, Page-10, Tuesday,  March 16, 2021