To be efficient, the government must help Pertamina

    The government should be able to help PT Pertamina (Persero) to get a contract to purchase crude oil directly from the National oil company/NOC of another country. Direct import contracts are considered more efficient because they can cut the cost of procuring crude oil.

PT Pertamina (Persero)

    The Executive Director of the Reforminer Institute, Komaidi Notonegoro, said that purchasing crude oil directly from NOCs of other countries would cut the supply chain of crude oil. This will have an impact on cheaper procurement costs, so it is positive for Pertamina, the government, and the community as consumers of fuel oil (BBM).

the Nigerian National Petroleum Corporation (NNPC)

    Pertamina's move to buy crude oil directly from the Nigerian National Petroleum Corporation (NNPC) is considered very positive. However, the company needs to be more aggressive in obtaining long-term direct purchase contracts to secure domestic fuel supplies.

“Generally there is state intervention. The agreement will generally be accompanied by bilateral cooperation in the same sector or other sectors," he said.

    Pertamina is not the first time buying Nigerian crude oil. Previously, for the 2017-2020 period, oil imports from Nigeria reached 30% of the company's total imports. This Nigerian oil belongs to the sweet crude category which is in accordance with the company's refinery specifications.

    However, this crude oil is usually marketed in the international market by International Oil Companies (IOCs) with participating interest (PI) in the oil and gas blocks in the country, such as ExxonMobil, Chevron, Shell, Total, and BP. Thus, this is the first time Pertamina has conducted a direct purchase contract with NNPC. In obtaining this contract, Pertamina must compete with 500 companies that register.

    According to Komaidi, the state usually helps its national companies to obtain similar agreements. He gave an example, the United States government does not even hesitate to intervene directly to help business entities originating from their country, even though they are not state-owned enterprises.

"Especially if this is Pertamina, which is a State-Owned Enterprise (BUMN)," he asserted.

    Currently, Pertamina seems to be left to do it alone. Whereas on the other hand, the government assigns and demands a very large tax contribution and Non-Tax State Revenue (PNBP) from the company. 

    Regarding the crude oil import contract with NNPC, Corporate Secretary of PT Pertamina Indonesia Refinery Ifki Sukarya said the volume will adjust to the development of refinery supply and demand in the coming year. This purchase contract is one of the efforts to ensure a sufficient supply of crude oil at the refinery.

"The estimated volume of crude oil supply from NNPC is currently around 900,000 barrels per quarter," said Ifki.

    Previously, KPI's Vice President of Feedstock & Inventory Management, Sani Dinar Saifuddin, said that Nigeria is Pertamina's largest source of crude oil imports. Meanwhile, the largest oil import is the type of Arabian Light Crude from Saudi Arabia's national oil company, namely Saudi Aramco.

Investor Daily, Page-10, Friday, July 23, 2021

Oil and Gas is Still the Mainstay

 

    The oil and gas industry sector is still relied on as one of the supports for depositing state revenues during the ongoing Covid-19 pandemic.

    In the midst of pressures that hit upstream Oil and Gas last year, the Oil industry was still able to provide deposits to the state worth Rp. 70.45 trillion in the form of non-tax state revenues (PNBP).

    This amount is still higher than PNBP from other non-oil and gas Natural Resources (SDA) sectors, namely minerals and coal. In the same period, the mineral and coal sector 'only' provided income to the state of Rp 34.63 trillion.

    Meanwhile, state income from the Oil and Gas sector comes from the state's share of the exploitation results after taking into account the government's obligations in upstream oil and gas business activities in accordance with contracts and provisions of laws and regulations. Income is also obtained from information services for potential auctions of oil and gas working areas and signature bonuses which are the contractor's obligation.

    This year, the dominance of deposits from oil and gas still dominates. The upstream oil and gas sector throughout the first semester of 2021 has supported US$ 6.67 billion or Rp. 96.7 trillion. The realization has even reached 91.7% of the year-long target set in the 2021 State Budget of US$7.28 billion.

Blogger Agus Purnomo in SKK Migas)

    Head of the Special Task Force for Oil and Gas (SKK Migas) Dwi Soetjipto said that the realization of state revenues could not be separated from oil prices which gradually improved after falling in 2020. With current achievements, Dwi believes state revenues from the upstream oil and gas sector by the end of 2021 will reached Rp. 154 trillion.

"ICP prices show an increase, even as of June 2021 reaching the US $ 70.23 per barrel. We will use this momentum optimally to encourage KKKS to be more aggressive in realizing operational activities," said Dwi.

    For your information, the 2021 State Budget sets the ICP assumption this year at US$ 45 per barrel so that the revenue target set has the potential to be exceeded long before the end of the year. Dwi added that the maximum state revenue is also an effort to optimize upstream oil and gas activities and costs. Activities carried out include selecting work order and maintenance priorities, as well as efficiency in operational activities, particularly due to activity restrictions.

"This effort succeeded in bringing the cost per barrel in the first semester of 2021 to US$ 12.17 per barrel of equivalent oil, lower than the first semester of 2020 of US$ 13.71 per barrel of equivalent oil," explained Dwi.

    Meanwhile, Energy Watch Executive Director Mamit Setiawan believes that the Oil and Gas sector is indeed the backbone of state revenue, both in terms of PNBP and taxes. Moreover, oil prices are in a very good position. According to Mamit, to keep this industry in good condition and attractive, there needs to be another relaxation by the government, especially from a fiscal perspective.

“If it is possible to foster an investment climate that leads to an increase in income, especially PNBP, there is nothing wrong with the government reducing its revenue. It is the same when the government makes a decision to reduce revenue when the gas price is US$6 per MMBtu,” he said.

    He added that the government needs to make a few sacrifices so that our investment climate is attractive and attractive compared to other neighboring countries such as Vietnam and Thailand.

"Besides that, I think legal certainty needs to be rushed in relation to the revision of the law which is currently unfinished," said Mamit.

    The founder of the ReforMiner Institute, Pri Agung Rakhmanto, assessed that if you want the Oil and Gas sector to be more useful, it doesn't need to always be directed as a PNBP producer. According to him, the Oil and Gas sector must first be encouraged to become an economic driver in a broad sense.

"From there, a multiplier effect will be generated for the movement of other related sectors, requiring labor which will ultimately increase tax revenue," he said.

ROKAN BLOCK

    In another development, PT Pertamina (Persero) through PT Pertamina Hulu Rokan (PHR) will drill as many as 161 wells after the transfer of management in the Rokan Block which will begin on August 9, 2021.

PHR

    Pertamina Hulu President Director Rokan Jaffee Suardin said in addition to the planned number of Wells drilling this year, his party would continue the drilling commitments that had been signed by PT Chevron Pacific Indonesia (CPI). 

PT Chevron Pacific Indonesia (CPI)

    Jaffee said that there will be an additional 77 Wells from CPI's commitment which will not be completed until the management transfer period on August 9th. In the previous target, Pertamina planned to drill only 84 wells for 2021.

"As of December 161 wells, the target production level is maintained and can increase," said Jaffee.

    According to him, PT Pertamina Hulu Rokan (PHR) has prepared the resources needed to realize the plan. To smooth the Wells drilling plan, as many as 16 to 17 rigs have been prepared. In addition, Jaffee said that human resources and supporting materials have been fully prepared so that when the transition period is over, all activities can start immediately.

“So the goal is that the transfer of management process will run smoothly without any disturbance. We have a target for the lifting to increase with a massive work program," he said.

    Deputy Head of SKK Migas Fatar Yani Abdurrahman said that CPI's failure to achieve drilling during the Rokan Block transition period was due to the difficulty of procuring the number of rigs. According to Fatar, CPI only has about 10 months from signing the investment commitment in the Rokan Block which was signed in September 2020. For the drilling, CPI should have required 10 rigs, but in practice, there are only 6 rigs available.

“Not to mention that the preparation for drilling will take 2 to 3 months. Therefore, we took the initiative to make one program only," he explained.

Bisnis Indonesia, Page-6, Friday, July 23, 2021

2022, Rokan Block Oil Production is Projected to Increase

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that the Rokan Block oil production could be increased to 175-180 thousand barrels per day (BPD) in 2022 after the management shifted to PT Pertamina Hulu Rokan (PHR) in August this. The increase in production was obtained from Well drilling, and the implementation of advanced oil recovery (EOR).

Blogger Agus Purnomo in SKK Migas

    SKK Migas Deputy for Operations Julius Wiratno is optimistic that oil production in the Rokan Block can rise again despite the transfer of management. The reason is, even now, there are indications of an increase in production by doing well drilling during the operatorship transition period. In the ongoing discussion of the 2022 work plan and budget (WP&B), there are also indications that oil production will increase next year.

"The estimate may be that it will return to 175-180 thousand BPD, with massive development, of course, it will directly contribute to production and lifting," he said.

The Rokan Block by Chevron

    The implementation of Well drilling is one of the nine issues monitored by SKK Migas in the transfer of management of the Rokan Block. Until now, the realization of drilling development wells in the Rokan Block has reached 83 wells from the target of 180 wells this year. 

    Furthermore, the realization of work over (workover) wells as many as 40 wells from a target of 39 wells, and well services (well services) 5,135 activities from a target of 6,819 activities.

    In the following years, Julius also believes that the Rokan Block's oil production will continue to increase. The reason is that Pertamina will apply surfactant EOR technology in the block. The Plan of Development/POD for the implementation of EOR is targeted to be approved this year.

"We are working hard for the approval of this EOR POD so that it can be implemented immediately with suitable chemicals and can support it towards full scale as soon as possible," he said.

    He hopes that the implementation of EOR in Minas Field, Rokan Block can be successful. If successful, this step is expected to contribute to the production of the Rokan Block in 2023-2024.

"Perhaps this [Rokan Block] will be an example of an oil and gas block taken by Pertamina whose production does not decrease, but instead increases," said Julius.

    EOR implementation is also one of nine issues monitored by SKK Migas. So far, the data transfer and the conversional chemical EOR model have been completed. Meanwhile, the procurement of surfactant (surfactant chemical) to be used in EOR activities is still in process. 

    At the time of signing the Rokan Block contract, the implementation of EOR activities was also 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 stage-1 steam flood Kulin or Rantau Bais US$ 88.6 million.

Going Smoothly

    Regarding the transfer of management of the Rokan Block in August this year, the Head of SKK Migas Dwi is optimistic that it will run smoothly.

“The main issue, namely the migration of technical and operational data, has made 94% progress. So we are sure that it can be completed in August,” said Dwi.

    So far, the data catalog and verification have been completed, but they are still waiting for a review and BAP from the Data and Information Center (Pusdatin) of the Ministry of Energy and Mineral Resources. Next, he said the development of the Rokan Block contract management had reached 97%. 

    A total of 282 of the 290 existing contracts have completed the mirroring process. The procurement of materials for 192 has been completed, as well as the procurement of 4 rigs in progress and 3 rigs in the process of the farm in. The progress of electricity, steam, and gas supply has also reached 80%.

“Where PLN has made an agreement with PHR for the supply of electricity and steam. And PLN already has a sales purchase agreement (SPA) with MCTN," said Dwi.

    MCTN or PT Mandau Cipta Tenaga Nusantara is the owner of the power plant that supplies electricity to the Rokan Block. Regarding employment, 99% of workers have received offers from PHR, and the addition of 125 new positions in the PHR Employment Plan (RPTK). Next, the transfer of information technology has reached 83% where a total of 232 applications are needed. 

    In detail, 31 CPI applications were replaced by Pertamina applications, then of the 129 CPI applications that are still in use, 88 applications have been approved and 41 applications are under discussion, and 72 commercial applications are provided by PHR.

PHR

    Then, the licensing and operating procedures have reached 98%. Environmental Impact Analysis (EIA/Amdal) has been completed for two locations, and another location is still in process. In addition, 7,611 standard operating procedures (SOPs) have been submitted from CPI to PHR.

CPI

"Environmental issues are 100% complete, where the environmental audit and program have been prepared and are waiting for a clean declaration from the KLHK (Ministry of Environment and Forestry)," said Dwi.

    In principle, as many as 157 Environmental Function Recovery Plans (RPFLH) have been completed. The Rokan Block is one of the largest oil and gas blocks in Indonesia. However, the production of this oil and gas block continues to decline. Referring to SKK Migas data, in 2011, the Rokan Block still produced around 356.98 thousand BPD of oil or contributed 39.56% of the total national oil production at that time of 902.35 BPD. 

    However, last year, oil lifting in this block was only around 174,424 BPD or 24.62% of the total national oil lifting of 708,488 BPD. As of June, the realization of the Rokan Block production was recorded at 160,646 BPD or 97.4% compared to the lifting target of the State Budget (APBN) is 165 thousand BPD.

Investor Daily, Page-10, Thursday, July 22, 2021

Upstream Oil and Gas Getting More Difficult

    The upstream oil and gas industry needs time to recover because contractors are still looking at the extent of the impact of the pandemic, which is currently booming.

    The Covid-19 pandemic, which was accompanied by a surge in new cases, forced the government to tighten people's mobility, making it more difficult for the upstream oil and gas industry to revive this year.

    This was acknowledged by the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto who stated that the Covid-19 pandemic had put pressure on the upstream oil and gas industry. The implementation of a number of upstream oil and gas activities was finally hampered.

"Some upstream oil and gas activities have been delayed for 1 to 5 weeks," said Dwi.

    A number of disrupted activities include 234 kilometers (km) of 2D seismic surveys, 165 km² of 3D seismic, six exploration wells, 12 development wells, and three development projects.

    In an effort to support the increase in oil and gas production, until June 2021, 186 development wells have been drilled, 309 workover activities, and 11,307 well service activities have been carried out. The realization is still far below the target set.

Blogger Agus Purnomo in SKK Migas

    In 2021, SKK Migas targets drilling 616 development wells. This number increased from the realization in 2020 which was only 240 wells.

    For workover activities, SKK Migas targets 615 wells, while well service activities are targeted at 26,431 activities.

    Meanwhile, during the first semester of 2021, SKK Migas recorded that the realization of ready-to-sale production or oil and gas lifting reached an average of 1.63 million barrels of oil equivalent per day (boepd) or only reached 95.6% of the 2021 APBN target of 1. 71 boepd.

    Dwi explained that entering the beginning of the year, the upstream oil and gas industry had started with low achievements with a production reduction of 19,500 bopd.

    He said there were unplanned shutdowns in a number of work areas which resulted in a production reduction of 4,000 bopd and a delay in drilling and drilling results which reduced production by 5,000 bopd.

"The outlook can be 680,000 barrels of oil per day, gas from the targeted 5,600 MMscfd, the proposed KKKS 5,100 MMscfd, and the proposal can be 5,108 WP&B and because there is a low entry point, it is projected to reach 5,529 MMscfd," he explained.

    According to him, the Covid-19 pandemic has made operational activities inefficient due to a reduction in manpower in the field.

    From a financial point of view, the price of oil that had fallen last year has disrupted the cash flow of cooperation contract contractors (KKKS) so that investment activities have stalled.

"We need time because contractors are also looking at the extent of the impact of the pandemic, which is currently booming," he said.

    SKK Migas Deputy Operations Julius Wiratno added that the reduced mobility of people and equipment during the Covid-19 pandemic was indeed felt by the upstream oil and gas sector, which in turn had an impact on operational activities.

    According to him, throughout the year operational activities are still quite challenging. This will certainly affect the long-term program (LTP) that has been set by SKK Migas.

"The correlation with LTP will be corrected, we are setting terms and conditions from this year to increase next year, but in fact, we will decrease by 3% -4% from the estimate," he explained.

    Meanwhile, during the first 6 months of this year, there were 10 out of 15 KKKS that recorded lifting realizations below the target of this year's APBN.

EMCL

    ExxonMobil Cepu Limited (EMCL) recorded a red report card with the realization of oil lifting of 208,936 bopd. This record is still lower than the 2021 State Budget target set at 219,000 bopd.

Chevron Pacific Indonesia (CPI)

    Apart from ExxonMobil Cepu Limited (EMCL), another KKKS that are below the target is Chevron Pacific Indonesia (CPI) with a lifting realization of 160,646 bopd or only 97.4% of the 2021 APBN target, which is 165,000 bopd.

PT Pertamina EP

    PT Pertamina EP is also a KKKS that recorded a red performance with the realization of oil lifting only 71,420 bopd or 84% of the APBN target of 85,000 bopd.

Pertamina Hulu Energi ONWJ

    Pertamina Hulu Energi ONWJ Ltd recorded the realization of 27,615 bopd or 98.6% of the 2021 APBN target of 28,000 bopd.

    Another Pertamina group that recorded below-target performance was Pertamina Hulu Energi OSES with the realization of 24,594 bopd or 91.1% of the 2021 APBN target of 27,000 bopd.

    Pertamina Hulu East Kalimantan reported the realization of 9,174 bopd or 87.4% of the 2021 APBN target of 10,500 bopd.

    Minor results were also recorded by Pertamina Hulu Sanga-Sanga with a lifting of 11,807 bopd or 99.2% of the APBN target of 11,900%. BOB Bumi Siak Pusako-Pertamina Hulu only reached 95.9% of the APBN target of 9,000 bopd with a realization of 8,913 bopd.

Petrochina International Jabung Ltd

    Next is Petrochina International Jabung Ltd which recorded a Red report card with the realization of 14,823 bopd or 92.6% of this year's APBN target of 16,000 bopd.

    On the other hand, for the realization of natural gas lifting, almost all KKKS have succeeded in exceeding the target set in the 2021 State Budget. However, there are several KKKS experiencing gas absorption problems.

STILL DEPRESSED

    Executive Director of the National Oil and Gas Company Association (Aspermigas) Moshe Rizal believes that the Covid-19 pandemic has made operations in the field quite challenging.

    In addition, KKKS still do not dare to increase their investment during the Covid-19 pandemic. The problem is, even though production is already running, increasing production cannot be separated from the need for investment.

"The government must immediately overcome this pandemic so that operations can run normally again. At the very least, to restore investor interest, incentives must be provided,” he said.

    Meanwhile, ReforMiner Executive Director Komaidi Notonegoro said referring to the realization of Indonesia's lifting since 2000, the results obtained usually do not reach the target and lead to a downward trend.

    In addition, the Covid-19 pandemic that has occurred since last year has again made the lifting target set by the government difficult to achieve due to the disruption of operational activities.

"However, conditions before the pandemic had shown a downward trend," he explained.

Bisnis Indonesia, Page-4, Monday, July 19, 2021

Pertamina Imports Crude Oil from Nigeria

    PT Pertamina (Persero) through PT Pertamina International Refinery (KPI) received a crude oil procurement contract from Nigeria. The import of crude oil was obtained by Pertamina from the Nigerian National Petroleum Corporation (NPCC).

NPCC

    Director of Feedstock and Product Optimization of KPI Yoki Firmandi said this is the first direct contract between Pertamina and NPCC, although Pertamina often buys Nigerian oil. So far, Pertamina has had to buy Nigerian crude oil through the international open market that has a Participating Interest, such as ExxonMobil, Chevron, Shell, Total, and BP.

Pertamina

"With Pertamina's direct deal with NPCC, the procurement process can take place more efficiently. Of course, getting a contract directly will be more efficient. This is in accordance with the refinery feedstock optimization plan in the future,” said Yoki.

    Pertamina was selected as an awardee from a total of 500 companies that registered. NNPC is a Nigerian National Oil Company, like Pertamina in Indonesia. The direct supply contract is very important for bilateral relations between the two countries. Yoki said that Nigerian crude oil is sweet crude.

    This direct contract has a duration from 2021 to 2023. Yoki explained that KPI was not alone in getting this direct contract. Purchasing crude oil directly to the NPCC is expected to increase the efficiency of purchasing crude oil directly to oil producers.

    KPI synergizes with Subholding Shipping PT Pertamina International Shipping (PIS) in terms of transportation. PIS has just launched two new Very Large Crude Oil Carrier (VLCC) vessels, namely MT Pertamina Prime and MT Pertamina Pride. Later the oil will be transported by a ship owned by PIS.

VLCC MT Pertamina Prime

    In addition, Pertamina International Marketing & Distribution, Pte Ltd (PIMD) under Subholding Commercial and Trading also played a role in supporting KPI in obtaining the contract. Vice President of Feedstock and Inventory Management KPI Sani Dinar Saifuddin said Nigerian oil has a large portion of Pertamina's oil import volume. In the 2017-2020 period, 30 percent of the volume of imported crude oil came from Nigeria. Pertamina's crude imports in 2019 amounted to 75.3 million barrels.

"Nigeria is Pertamina's second-largest source of crude oil imports, after Arabian Light Crude supply to FOC I RU IV Cilacap from NOC Saudi Arabia Aramco," said Sani.

 

Aramco

    Meanwhile, crude oil imports this year are projected to increase significantly compared to 2020. According to Pertamina's 2021 projection data, crude oil imports are targeted to reach 118.4 million barrels, an increase of about 50.4 percent compared to last year's crude oil imports which were only 78.7 percent. million barrels.

Nicke Widyawati

    Pertamina President Director Nicke Widyawati said Pertamina needed to maximize the refinery processing capabilities that needed to be supplied with oil. In addition, there was a decrease in GOI entitlement due to the still low Indonesian oil price (ICP).

"We have an increase in imports of 39.7 million barrels," said Nicke.

    Previously, Nicke projected that the volume of crude oil imports this year would increase to 118.4 million barrels. This projection is up 50.4 percent from the realization of crude oil imports throughout 2020 which reached 78.7 million barrels. The increase in crude oil imports is part of Pertamina's refinery optimization strategy.

Republika, Page-9, Wednesday, July 14, 2021

Pertamina Imports Crude Oil Directly from Nigeria

    PT Pertamina (Persero) through PT Refinery Pertamina Internasional (KPI), managed to get a contract to import crude oil directly from the Nigerian national oil and gas company, namely the Nigerian National Petroleum Corporation (NNPC). This direct contract makes the cost of procuring crude oil more efficient. 

the Nigerian National Petroleum Corporation (NNPC)

    In general, Nigerian crude oil is marketed in the international market by the International Oil Company (IOC) which has Participating Interest (PI) in the oil and gas blocks in the country, such as Exxon Mobil, Chevron, Shell, Total, and BP. The direct agreement between Pertamina and NNPC makes the procurement process more efficient.

"Of course, getting a direct contract will be more efficient which is in line with the refinery feedstock optimization plan in the future," said KPI's Director of Feedstock & Product Optimization Yoki Firnandi.

    The crude oil import contract with NNPC is valid from this year until 2023. The entire supply of oil is to meet the feedstock needs of Pertamina's refineries. Previously, for the 2017-2020 period, oil imports from Nigeria reached 30% of the company's total imports. This Nigerian oil belongs to the sweet crude category which is following Pertamina's refinery specifications.

Aramco

"Nigeria is Pertamina's second-largest source of crude oil imports, after Arabian Light Crude supply to the Cilacap Refinery from Saudi Arabia's NOC (national oil company/national oil company), Aramco," said Pertamina's Vice President of Feedstock & Inventory Management, Sani Dinar Saifuddin.

    To get the supply of Nigerian crude oil, Pertamina must compete with 500 companies that register. The direct contract with NNPC is Pertamina's first achievement. Pertamina International Marketing & Distribution Pte Ltd (PIMD) under PT Pertamina Patra Niaga as Subholding Commercial Marketing also supported KPI in getting the contract.

the Pertamina Prime VLCC

    Later, the transportation of crude oil from Nigeria will be carried out by PT Pertamina International Shipping (PIS). Moreover, PIS has completed the procurement of two very large crude carriers (VLCC), namely the Pertamina Prime and Pertamina Pride tankers.

Nicke Widyawati

    Previously, Pertamina President Director Nicke Widyawati said that after forming the sub-holding, subsidiaries were given the freedom to formulate types of crude oil that could produce good quality and better yields of valuable products. So, her party decided to use imported crude oil more. 

    Referring to Pertamina's data, imports of crude oil this year will reach 118.4 million barrels, up 39.7 million barrels or 50.44% from last year's imports of only 78.7 million barrels. Crude oil imports in 2021 are also much higher than imports in 2019 which amounted to 86.9 million barrels.

    This strategy can also reduce the trade balance deficit. This is because the price of imports is lower than the price of Indonesia's oil exports. The average purchase of crude oil imports this year is US$ 57.8 per barrel, while Indonesia's average oil exports reach US$ 59.8 per barrel. She estimates that there will still be a surplus of US$ 75 million.

Investor Daily, Page-10, Tuesday, July 13, 2021

PLN DOMINATES ROKAN'S ELECTRICITY SUPPLY

    PT PLN (Persero) is preparing to control the electricity supply for the Rokan Block after signing a share purchase agreement with PT Mandau Cipta Tenaga Nusantara MCTN), which has been supplying energy for the legendary oil and gas working area.

    PLN President Director Zulkifli Zaini said that with this signing, 100% of PT Mandau Cipta Tenaga Nusantara (MCTN) shares will be owned by PLN. Meanwhile, MCTN is an electricity company owned by Chevron Standard Limited (CSL).

    Through this acquisition, PLN will utilize the gas power plant (PLTG) North Duri Cogen with a capacity of 300 megawatts (MW) previously owned by MCTN to ensure the availability of electricity and steam supply to the Rokan Block during the transition period.

"We will supply electricity and steam to the Rokan Working Area from the PLN side in two stages," he said.

The Rokan Block Chevron

    First, short-term power supply. After the acquisition of MCTN shares, the company's operations will continue for a 3 year transition period. Second, the supply of electricity for the long term. PLN will interconnect the electricity system in the Rokan Block with the Sumatra electricity system.

    PLN's Director of Commerce and Customer Management Bob Sariel said the acquisition was very important for the operation of the Rokan Block. This is done to ensure that the electricity supply does not stop after the transfer of management of the Rokan Block from PT Chevron Pacific Indonesia (CPI) to PT Pertamina Hulu Rokan on August 8, 2021.

PT Chevron Pacific Indonesia (CPI)

“If you want to build a network, it takes 2 years to replace the object or 1 year to relocate. If there is a 1.5-year time lag that causes electricity to be unable to flow to Rokan, of course, the oil Working Area in the Rokan Block will experience a decrease in production, "he said.

    In addition, the acquisition decision is also considered to be better than just entering into a power purchase contract with MCTN or renting the power plant. Moreover, MCTN is the only one that can supply electricity to the Rokan Block.

    After a 3-year transition period, the Rokan Block's electricity needs will be supplied from a more reliable Sumatran electricity system. According to Bob, Sumatra's electricity system has a very strong supply with supplies from a number of steam power plants (PLTU), hydroelectric power plants (PLTA), and geothermal power plants (PLTP) in the region. Currently, the company is building a 500 kV transmission network to strengthen Sumatra's electricity system.

    Regarding investment to support electricity supply to the Rokan Block, PLN has allocated around Rp11 trillion. However, Bob has not been able to reveal more details about the acquisition value of MCTN shares on the grounds that they are still bound by a non-disclosure agreement (NDA). 

    The contents of the MCTN share sale and purchase agreement can only be opened after the administrative and financial processes are completed approximately 1 month after the signing of the share purchase agreement. What is clear, the acquisition funds will come from internal PLN.

Jennifer Ferratt

    Regional Director of Chevron Standard Limited Jennifer Ferratt said that with the completion of the share sale and purchase process, the company is committed to creating a smooth transition in MCTN and in line with the transition of the Rokan Block to Pertamina Hulu Rokan (PHR).

"We would like to thank PLN for working with CSL to achieve fair and mutually beneficial results," said Jennifer.

    Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif added that the Rokan Block has huge potential for oil reserves. Therefore, to be able to provide maximum benefits for the country, a good strategy is needed.

"PLN must ensure a guarantee of electricity supply for the Rokan Block so that Pertamina is able to maintain the sustainability of the production of 25% of the national oil," he said.

    Meanwhile, Deputy Minister I of SOEs Pahala Nugraha Mansury hopes that the follow-up to this sale and purchase agreement will run smoothly and in tandem with the management transfer process which will take place soon.

“The Rokan Block is very strategic for Indonesia because it produces 25% of the national oil production. So far, the majority of electrical energy has been supplied by power plants owned by MCTN, so this agreement is very important to ensure the supply of electricity for the Rokan Block in the future," said Pahala.

    Meanwhile, the acquisition of MCTN shares is a follow-up to the cooperation agreement between PLN and Pertamina Hulu Rokan which was included in the memorandum of understanding for the cooperation in providing electricity and steam in the Rokan Working Area on December 30, 2020, and the sale and purchase agreement for electricity and steam on January 29. 2021.

Pertamina Hulu Rokan (PHR)

BUSINESS EFFICIENCY

    President Director of Pertamina Hulu Rokan (PHR) Jaffee A. Suardin said with this commitment, Pertamina's position would be even stronger because it had ensured the continuity of the Rokan Block's operational activities.

"The presence of PLN for electricity in the Oil Working Area in the Rokan Block is a form of good BUMN synergy, with the hope of increasing business efficiency, especially related to electricity and steam costs which can be more economical and efficient, so as to be able to support the development of Pertamina Hulu Rokan (PHR) oil wells." Pertamina Hulu Rokan (PHR) with better economies of scale," he said.

    Meanwhile, the demand for electricity and steam in the Rokan Block Oil Working Area is 400 MW and 335,000 barrels of steam per day (Mbspd). Most of these needs are supplied from the 270 MW and 265 Mbspd MCTN plants and the remaining needs are met from the Rokan Block Oil Working Area internal generator.

    The electricity and steam supply is to maintain the continuity of oil production in the Rokan Block Working Area which is expected to be maintained at around 160,000 thousand barrels per day this year with the addition of new wells being drilled. Currently, the Rokan Block production is recorded at 162,951 barrels per day, which is the second-largest production after the Cepu Block in East Java, Indonesia.

    Energy Watch Executive Director Mamit Setiawan explained that the process of signing a share purchase agreement between PLN and MCTN was a new step in the Rokan Block transition process. According to him, through this process, the problem of electricity and steam supply for the Rokan Block can be resolved in the future.

"SOE synergy between Pertamina and PLN is a strategic step in developing and helping fellow SOEs considering the Rokan Block is the backbone of national oil production," said Mamit.

Bisnis Indonesia, Page-4, Wednesday, July 7, 2021

Electricity Supply for Rokan Block, PLN Officially Acquires MCTN Shares

    PT Perusahaan Listrik Negara (PLN) (Persero) officially acquired 100% shares of PT Mandau Cipta Tenaga Nusantara (MCTN) which is owned by Chevron Standard Limited. 

    This acquisition is proof of PLN's commitment to maintaining the continuity of the Rokan Block electricity supply, both during the transition period and in the long term. Moreover, the Rokan Block is the backbone of national oil production.

The Rokan Block Chevron

    The acquisition process was marked by the signing of a sales and purchase agreement (SPA) by the Director of Commerce and Customer Management of PLN, Bob Sariel, and Regional Director of Chevron Standard Limited, Jennifer Ferratt, online.

Director of Chevron Standard Limited, Jennifer Ferratt

    This agreement was also witnessed by Minister of Energy and Mineral Resources Arifin Tasrif, Deputy Minister I of BUMN Pahala Nugraha Mansury, Head of SKK Migas Dwi Soetjipto, President Commissioner of PLN Amien Sunaryadi, President Director of PLN Zulkifli Zaini, and the management of Chevron Standard Limited as the majority shareholder of MCTN.

Blogger Agus Purnomo in SKK Migas

    Zulkifli said that the acquisition of the MCTN shares is proof of PLN's commitment to maintaining the continuity of the Rokan Block electricity supply, both during the transition period and in the long term. Moreover, the Rokan Block is the backbone of national oil production.

the Rokan Block Chevron

    As is known, the management of the Rokan Block from August 9, 2021, will shift from PT Chevron Pacific Indonesia (CPI) to PT Pertamina Hulu Rokan (PHR). So far, the electricity and steam supply for the Rokan Block comes from the North Duri Cogen Gas Power Plant (PLTG) with a capacity of 300 Megawatts (MW) which was previously owned by MCTN, a subsidiary of Chevron Standard Limited (CSL).

PT Chevron Pacific Indonesia (CPI)

"We would like to thank Chevron Standard Limited (CSL) for the good cooperation and for the good electricity in the Rokan Work Area as long as it is managed by Chevron Pacific Indonesia," said Zulkifli virtually in Jakarta.

    The acquisition of MCTN shares is a follow-up to the cooperation agreement between PLN and PT Pertamina Hulu Rokan (PHR) which was included in the Memorandum of Understanding (MOU) for the Provision of Electricity and Steam for the Rokan Region on December 30, 2020, and the Sale and Purchase Agreement for Electricity and Steam on January 29, 2021.

    Zulkifli hopes that, through the signing of the sale and purchase of shares, a good partnership can be established as the first step in building partnerships and cooperation between PLN and Chevron Standard Limited (CSL) in the future. 

    In the future, this power plant will be used for three years to serve electricity needs in the Rokan Block. Both during the transition period together with PLTG Migas and Central Duri until finally it will be supplied from the Sumatra interconnection system.

“In the long term, reliable and competitive supply of 400 MW of electricity in the Rokan Block will be supplied from the Sumatra and 335 MBSPD Steam system using the New Steam Generator. Within 3 years the interconnection of the system and the New Steam Generator will be fully operational," he added.

    In addition, the provision of reliable electricity supply from the Sumatra System to the Rokan Block is carried out from three sources.

"PLN prioritizes aspects of safety, reliability, quality, and efficiency in meeting the energy needs of the upstream oil and gas industry," he said.

    PLN as a BUMN that is given the mandate in the electricity sector, has an obligation to meet electricity needs and provide the best service for all customers, including industrial customers, one of which is the oil and gas sector, both from upstream and downstream.

“PLN as the most experienced electricity provider in Indonesia has a special design and strategy in providing electricity for the oil and gas industry. Currently and in future plans, PLN's large systems such as Java, Sumatra, Kalimantan, and Sulawesi have a very large reserve margin (40-50%) to be able to serve the needs of the oil and gas industry," said Zulkifli.

    Regional Director of Chevron Standard Limited, Jennifer Ferratt said, with the completion of this process, it is hoped that the transition at MCTN can take place smoothly and in line with the transition of the Rokan Block to PT Pertamina Hulu Rokan (PHR).

    Minister of Energy and Mineral Resources Arifin Tasrif added that the Rokan Block has huge potential for oil reserves. Therefore, to be able to provide maximum benefits for the country, a good strategy is needed. With this agreement, PLN will continue to use the North Duri Cogen PLTG before the Rokan WKB electricity supply is supplied by the Sumatra system interconnection network.

“PLN must ensure a guaranteed electricity supply for the Rokan Block so that Pertamina is able to maintain the sustainability of the production of 25% of the national oil. Therefore, power plants must be reliable with more efficient costs, so that they can provide much better benefits for the nation and state," he said.

    The Deputy Minister of State-Owned Enterprises, Pahala Nugraha Mansury, also appreciated PLN and CSL for successfully completing the transfer of ownership of MCTN. He also hopes that the transition process in this one month can go hand in hand with the Rokan working area from Chevron to Pertamina smoothly.

“The Rokan Block is very strategic for Indonesia because it produces 25% of the national oil production. So far, the majority of electrical energy has been supplied by MCTN's power plants. So this agreement is very important to ensure the electricity supply for the Rokan Block in the future," he added.

Support Pertamina's Production

    Meanwhile, Pertamina expressed its appreciation for the signing of the SPA to fulfill the electricity needs of the Rokan Working Area (WK).

PT Pertamina Hulu Rokan (PHR)

"Pertamina appreciates the agreement process between Chevron Standard Limited and PLN related to efforts to meet the electricity needs for Rokan WK," said PT Pertamina Hulu Rokan (PHR) President Director Jaffee A. Suardi.

    Furthermore, Jaffee added that this commitment will certainly strengthen Pertamina's position, in this case through PT Pertamina Hulu Rokan (PHR), to ensure the continuity of production of the Rokan Oil and Gas Block Working Area, which of course contributes significantly to national oil and gas production.

Investor Daily, Page-10, Wednesday, July 7, 2021