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Showing posts with label ESDM. Show all posts
Showing posts with label ESDM. Show all posts

Saturday, October 22, 2016

Pertamina's Split Value 40% Is Very Economical



    PT Pertamina and consortium members, Exxon Mobil and PTT Thailand, are still evaluating the government's 40% split offer. However, Pertamina considered the offer to be very economical.


    Pertamina Upstream Director Syamsu Alam said that his party and consortium members are still evaluating the offer and plans for developing the East Natuna Block. 


the East Natuna Block

    Moreover, to date, not all members have submitted proposals regarding the terms and conditions for the East Natuna Block contract. Pertamina and the consortium have not been able to agree on the terms and conditions offered by the government.

"From Pertamina's evaluation, this figure may still be economical, but only for the AR structure, while the AP structure awaits the results of TMR (technology and market review).

    Syamsu explained that the evaluation took a very long time because the East Natuna Block development was carried out in stages. According to the plan, in the first phase, the development of the block on the Indonesian border will start from the work on the AP structure which has the dominant oil reserves. In the next stage, a gas-dominant AP structure with a carbon dioxide content of 72% will be worked out.

    Syamsu once revealed that oil production in the East Natuna Block could be done faster than gas. This is because oil development does not need to determine who the buyers are and the method of transportation, as in the gas business. 

    He admitted that gas development took a very long time because Pertamina had to ensure that it was commercialized. So if you want to have activity in Natuna immediately and withdraw other oil and gas blocks to be active immediately, that can be done by developing oil first.

    Moreover, the development of oil from oil and gas blocks in Natuna can later be carried out in an integrated manner. Currently, Pertamina and partners are working on a technology and market review / TMR for gas block production at the Indonesian border. Later, Fiscal for gas development will be based on the results of TMR which will be completed in 2017.

Energy and Mineral Resources (ESDM


    Previously, the Upstream Director of the Directorate General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM) Tunggal revealed that the government had conveyed all the terms and conditions of the East Natuna Block offered to Pertamina and the consortium.

Some of the offers are split and signature bonuses. The split offered can be up to 40% for Pertamina because it is in accordance with the applicable regulations.
"Only Pertamina and the consortium are willing to bid,".

    Not only that, but the government also added a clause that the East Natuna Block production sharing contract / PSC could be revised once the TMR was completed. He said Pertamina partners were currently consulting with their head office regarding the government's offer.

"Exxon Mobil said that at the end of November it gave an answer. The acceleration of the development of the East Natuna Block is the government's desire ".

    Director-General of Oil and Gas of the Ministry of Energy and Mineral Resources I Gusti Nyoman Wiratmaja Puja said that the acceleration of the development of the East Natuna Block was necessary to safeguard Indonesia's sovereignty. This is because there have been attempts by other countries to draw their borders beyond the borders of the archipelago.

    We hope that in the next year it will be able to produce. Wiratmaja hopes that exploration activities can be carried out immediately in the East Natuna Block. Furthermore, this block can immediately produce around 7,000 to 15,000 barrels of oil per day (BPD). Oil reserves in the East Natuna Block are estimated at around 46 million barrels. Meanwhile, its gas reserves are 42 trillion cubic feet.

Investor Daily, Page-9, Thursday, Oct 22, 2016

Friday, October 21, 2016

Upstream Investment is Expected to be Enthusiastic



    It is hoped that upstream oil and gas investment in Indonesia will revive following the increase in oil prices in the last few days. The increase in world oil prices has an impact on the increase in Indonesian oil prices.

    Based on Bloomberg data on Thursday's trading (20 / October), the price of Brent oil was US $ 52.57 per barrel and WTI US $ 51.41 per barrel. This price is the highest in the last year. The increase in price was triggered by the decreasing supply factor in the United States. On February 11, 2016, WTI reached its lowest price in the past year, namely 26.21 US dollars per barrel.

    The lowest price for Brent in the past year on January 20, 2016, was 52.88 US dollars per barrel. Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM) I Gusti Nyoman Wiratmaja said that the increase in world oil prices has an impact on Indonesia's crude price / ICP.

    This condition is expected to stimulate upstream oil and gas investment in Indonesia. If the world oil price rises, practically the ICP will also increase. This means that state revenues will also increase. In addition, I hope this increase will stimulate upstream investment in Indonesia. This year, the government and the House of Representatives agreed to set the ICP at the US $ 40 per barrel. In the preparation of the 2017 State Budget (APBN), the ICP benchmark was raised to 45 US dollars per barrel.

    Based on data from the Ministry of Energy and Mineral Resources, the ICP in September 2016 amounted to 42.17 US dollars per barrel, up from the August 2016 price of 41.11 US dollars per barrel. The lowest ICP this year was 2749 US dollars per barrel in January.

"If the trend of world oil prices continues to rise, it will be in accordance with our projection in the 2017 State Budget, which is around the US $ 45 per barrel for the ICP".

F    or PT Pertamina (Persero), which everyday imports around 430,000 barrels of crude oil, this price increase does not really affect the company's finances. Moreover, it is difficult to predict the continuation of this rising price trend.

"The increase in oil prices is not too significant with the budget for imports. Pertamina imports oil with a futures contract system, at least for up to six months, ”said Pertamina Vice President for Corporate Communication Wianda Pusponegoro.

Wianda Pusponegoro

    At a time when the world oil price was around 100 US dollars per barrel, the need for foreign exchange to import crude oil and Pertamina's fuel oil was 150 million US dollars to 200 million US dollars per day. The fall in oil prices since late 2014 reduced the need for US dollars to import oil by more than 50 percent. State revenue An increase or decrease in ICP has a direct effect on state revenue. In 2015, with an average ICP throughout the year of US $ 48 per barrel, the contribution of oil and gas revenues was around Rp. 136 trillion.

    This figure is much lower than in 2014, which increased revenues of IDR 320 trillion with an average ICP of 96 US dollars per barrel. The drastic drop in oil prices has also made an upstream investment in the oil and gas sector in Indonesia less attractive. In 2015, upstream oil and gas investment spending was 15.34 billion US dollars, lower than in 2014 which reached 20.36 billion US dollars. Meanwhile, spending in the first semester of 2016 was the US $ 5.56 billion.

Kompas, Page-1, Friday, Oct 21, 2016

Gas Network Project and Trimmed Converter Kit



    The Ministry of Energy and Mineral Resources (ESDM) has cut several strategic projects. Trimming the project, in order to make budget savings next year.

    ESDM Minister Ignasius Jonan said that next year his party would cut the budget ceiling by Rp. 291.59 billion so that it would be Rp. 7.3 trillion for the budget in the 2017 State Budget (APBN). This budget cut would not interfere with the performance of the Ministry of Energy and Mineral Resources.

"What is being cut is as much as possible not disturbing the development targets for 2017, particularly the ESDM sector,".

    The cut budget is part of the savings and seeing the project work that will take place.

"What we can do about it is not ready, if possible, we will move the multiyear to 2018,".

    For example, the budget cuts for the construction of a household gas network project of 15,500 household connections (SR) worth Rp. 100 billion. That way, the network to be built from 69,200 SR to only 53,700 SR next year. It consists of 10,000 SR of Musi Banyuasin in Sumatra, Muara Enim and Pali 10,000 SR, Pekan Baru Riau 3,200 SR and existing 4,000 SR, Bontang development for 6,000 SR and existing 4,000 SR, Bandar-Lampung 10,000 SR, Mojokerto 10,000 SR and Samarinda 4,500 SR. .

    According to Jonan, the area built by the network must have an economical scale with a minimum development of 10,000 SR. In addition, the gas distribution must be available when the network has been completed. 

Wianda Pusponegoro

    Wianda Pusponegoro, Vice President for Corporate Communication at Pertamina, said that regarding the gas network, Pertamina has made a lot of additional investment.

"The additional budget in one location could be around Rp. 60 billion, the standard is for 4,600 connections,".

    ESDM also cut the budget for converter kit fishermen by 4,400 units, from the original 28,400 units to 24,000 units, from Rp 100 billion to Rp 55 billion. Then cut the budget, coal gasification plant with a value of Rp. 49.7 billion.

    Jonan also said that the Ministry of Energy and Mineral Resources will cut the budget for the waste generation to 39.29 billion, from the original Rp. 50 billion. Finally, the budget cut from savings in goods and capital expenditures at the Ministry of Energy and Mineral Resources unit amounted to Rp 52.6 billion. This budget cut is mainly for operational costs.

"We are trying to reduce Rp. 52 billion, this actual number could reach hundreds of billions," explained Jonan.

Kontan, Page-14, Friday, Oct 21, 2016

ESDM Finalizes Proposed Revision of Profit-Sharing Counter



    The government is currently discussing a proposal to create a new production sharing contract (PSC) scheme. Currently, the government is comparing PSCs from other countries, such as Malaysia, Algeria, South America, and Peru, to get the best production sharing contracts.

"The idea of ​​PSC from us is that they only take, using, and modify them. We also want to see what their modifications are like, what positive effects," said Director General of Oil and Gas of the Ministry of Energy and Mineral Resources (EMR/ESDM), IGN Wiratmaja Puja.

Energy and Mineral Resources (EMR/ESDM


    Currently, the discussion regarding the PSC has not been completed. The government has a strategy to include a new PSC scheme in the implementation of Government Regulation (PP) Number 79 of 2001 concerning Refundable Operating Costs and Tax Treatment for the Upstream Oil and Gas Industry.

"We are discussing it and later in the implementation of Government Regulation number 79 it has been made flexible there,".

    Later, the PSC proposal will also be included in the revision of the Oil and Gas Law. One of the new PSC proposals is a production sharing contract without any cost recovery. The scheme is still being considered by the government.

"Some use it too, KKKS use a gross split, (cost recovery) is paid in advance, it's just that we are discussing all the positive and negative benefits. All aspects are discussed.

Kontan, Page-14, Friday, Oct 21, 2016

63 LNG Cargo Uncontracted



    Director-General of Oil and Gas of the Ministry of Energy and Mineral Resources (ESDM) IGN Wiratmaja said there are still 63 LNG cargoes that have not been contracted or uncommitted for 2017 originating from the Bontang and Tangguh Refineries in Papua. Currently, his party is still in the negotiation stage to sell 13 cargoes as part of the 63 LNG cargoes.

Energy and Mineral Resources (ESDM)


    Although the number of Liquefied Natural Gas / LNG that has not obtained the contract is very high, the government has not suggested selling the gas to the spot market. According to him, there is still an opportunity to sell liquefied natural gas to countries that have been customers so far, such as the limited regasification facilities in Indonesia, which means that LNG is not optimally purchased domestically.

    Taiwan, Korea, and Japan. "Next year there are 63 cargoes, 13 cargoes are being negotiated. We want to be sold to existing buyers, "he said after the work meeting of the Ministry of Energy and Mineral Resources with Commission VII of the House of Representatives, Thursday (20/10).

    LNG that has not been contracted is very significant because the production of several oil and gas fields is very good. However, this oil and gas field is not supported by adequate regasification infrastructure. On the other hand, LNG needs for power plants in Indonesia have been met. Based on data from the Ministry of Energy and Mineral Resources, the volume of LNG that has not been contracted in 2018 is 60 cargoes. Meanwhile, starting 2019, a supply of 27 cargoes from abroad will be needed.

    In fact, LNG imports in 2024 will increase to 90 cargoes and 101 cargoes in 2025 due to increased domestic demand. Abadi Field, Masela Block has yet to start gas production. The gas supply from the Tangguh Refinery will begin to decline in 2024. Wiratmaja emphasized that until 2019, the government will not open an import route for liquefied natural gas. 

    LNG imports are likely to open after 2019. The Ministry of Finance is cutting the budget for the construction of a household gas network and converter kits for fishermen. The IDR 2.69 trillion budget allocated for the management and supply of oil and gas was cut by IDR 156.38 billion to IDR 2.54 trillion.

    The reduction came from the city gas network construction ceiling of 15,500 household connections from 69,200 house connections to 53,700 house connections and the cutting of 4,400 converter kit units for fishermen from 28,400 units to 4,400 units. Another cut comes from the Coal Gasification Power Plant project with a capacity of 3 MW in South Kalimantan, valued at IDR 49.7 billion.

    ESDM Minister Ignasius Jonan said the government would make adjustments so that they would not have a major influence on a number of programs that had been planned.

"We are adjusting. The Ministry of Energy and Mineral Resources tries to cut it as much as possible not to interfere with the development target for 2017, especially in the ESDM sector.

Bisnis Indonesia, Page-30, Friday, Oct 21, 2016

Thursday, October 20, 2016

PGN Owns and Operates 78% of Gas Pipes in Indonesia



    PT Perusahaan Gas Negara (Persero) Tbk (PGN) continues to build its natural gas pipeline infrastructure. Currently, the length of natural gas pipelines owned and operated by PGN reaches more than 7,200 kilometers (km). This amount is equivalent to 78 percent of the downstream gas pipelines throughout Indonesia.

    PGN's Corporate Secretary, Heri Yusup, said that to date, the total length of pipelines built and operated by PGN has reached more than 7,200 km. This number is an increase compared to the total length of pipe at the end of 2014 which reached 6,161 km.

"As a National Gas Company, PGN will continue to develop natural gas infrastructure to expand the use of natural gas for the community," said Heri.

    Starting this year, until 2019 PGN will add more than 1,680 km of natural gas pipeline infrastructure. The pipeline project is spread across various regions, including the Duri-Dumai open access transmission pipeline project, the Batam (Nagoya) WNTS-Pemping distribution pipe, and natural gas distribution pipelines in existing areas and other new areas.

"We have been doing pioneering by opening new areas that have not been touched by natural gas so that more areas can enjoy the benefits of energy from natural gas," said Heri.

    Heri said that PGN's natural gas infrastructure was built using its own funds.

"Everything was built with PGN's own investment without relying on the State Budget (APBN),".

    Heri Yusup added that the PGN gas pipeline in 2019 is targeted to reach 8,656 km. The addition of this gas infrastructure can increase the ability to utilize natural gas by as much as 1,902 million cubic feet per day (MMSCFD). In 2015, PGN was able to distribute natural gas reaching 1,591 million cubic feet per day (MMSCFD).

"From the distribution of PGN's natural gas to customers, it creates savings for the nation of Rp. 88.03 trillion per year," said Heri.

    Until now, PGN has never stopped building natural gas infrastructure in various regions in Indonesia. The main objective is one, namely so that natural gas, especially domestically produced, is environmentally friendly, efficient and safe and can easily be enjoyed by the wider community.

"For example, this year alone PGN has completed the construction of a gas pipeline in Batam along 18.3 km, then in Pasuruan, East Java PGN has completed the construction of a 15 km gas pipeline on the Kejayan-Purwosari section. Then there is another 27 km Jetis-Ploso segment. km, another 30 km in Kalisogo-Waru, East Java, "Heri detailed. PGN is the only business entity that distributes natural gas to various customer segments.

    Starting from households, MSMEs, hospitals, malls, hotels, restaurants, industry, power plants to transportation. PGN's natural gas has been enjoyed by more than 116,600 household customers. In addition, 1,900 small businesses, malls, hotels, hospitals, restaurants, and restaurants, as well as 1,580 large-scale industries and power plants.

    PGN also continues to encourage efforts to diversify vehicle fuels from BBM to natural gas. Currently, PGN has operated 7 Gas Refueling Stations (SPBG), the 8 partner SPBGs, and the 5 MRU (Mobile SPBG). PGN Dear Ibu PGN is ready to add 110,000 household natural gas connections in the next 3 years. Currently, PGN's natural gas has been enjoyed by people from Sumatra to Papua.

"We have a PGN Sayang Ibu program, this program aims to increase the number of households using natural gas energy. From this year to 2019, we will add 110,000 household gas connections, ”said Heri.

    The additional 110,000 household gas connections were financed from PGN's own investment, without relying on funds from the government or the state budget.

"It is also the responsibility of PGN as a State-Owned Enterprise and National Gas Company in Indonesia, to spread the use of natural gas that is efficient, environmentally friendly, easy and safe," said Heri.

Koran Sindo, Page-11, Thursday, Oct 20, 2016

ESDM looks at the budget for the new oil and gas project


    Oil and gas contractors who will submit budgets for new oil and gas field projects cannot sleep soundly. The Ministry of Energy and Mineral Resources (ESDM) will examine in detail the budget and proposed work program. Understandably, at this time, the Ministry of Energy and Mineral Resources is making savings on the cost recovery of oil and gas contractors on new oil and gas projects.

    Deputy Minister of Energy and Mineral Resources (ESDM) Arcandra Tahar said that the efficiency of the cost of recovery will be imposed on the development plan or plan of development (POD) of the newly proposed oil and gas project.

the IDD Chevron


"The upcoming PoD-PoDs are for example the IDD Chevron, Masela Block, and East Natuna Block. We will see the size of the new ones and reduce the costs," said Arcandra.

The Masela Block


    According to him, the government will reduce the cost recovery from the POD that will be proposed by oil and gas contractors, namely in terms of capital expenditure (capex) and operational expenditure (opex).

"We can reduce cost recovery with capex and that is the component, so we will see," explained Arcandra.

    Meanwhile, the POD that has already occurred will not be recalculated. Arcandra said the government must also be able to maintain investor confidence. That is why the government will continue to respect existing contracts.

"It will not be changed, we will respect the existing one first, because it has been agreed upon, because the project has already started. How can I change it again? Unless there is an administrative error there,"

    Denie S. Tampubolon, Senior Vice President of Upstream Business Development at PT Pertamina, has not been able to comment on the efficiency of cost recovery for the East Natuna project. The East Natuna project value reaches US $ 24 billion.

    Inpex Corp's Senior Manager Communication and Relations Usman Slamet and Chevron's Corporate Communication Manager, Prasasti Asandhimitra, have not yet responded to the confirmation that there is a need to change capital expenditures in the Masela and Chevron IDD projects if later submitted. 

    Currently, Inpex has not submitted a proposal to revise the Masela project, but the estimated investment is US $ 15 billion, while the government has not approved the Chevron project with an investment of up to US $ 7 billion.

    Fahmi Radhi, an Energy Observer from Gajah Mada University, suspects that so far, cost recovery has been the target of rent-seeking through mark-ups and other modes, namely increasing the purchase price of drills, changing drill bits, which can still be used. Then, another mode is to include various expenses that are not supposed to be a cost recovery component.

"The rent-seeking is carried out by companies that obtain sub contracts in the transportation of equipment needed for drilling,".

    The government can start thinking about changing the production sharing contract (KPS) scheme to reduce the total cost recovery to a ratio of 60:40, by reducing the cost recovery borne by the government by up to 50%.

Kontan, Page-14, Thursday, Oct 20, 2016

Wednesday, October 19, 2016

Hundreds of Oil and Gas Contracts Received Special Treatment




    The government guarantees that oil and gas Cooperation Contract Contractors (KKKS) are free from levies and taxes (assume and discharge) during their business activities in Indonesia. This government plan will be included in the revision of Government Regulation Number 79 of 2010 concerning Refundable Operating Costs.

"There has been an agreement with the Deputy Minister of Finance to apply the assume and discharge principle," said Teguh Pamudji, Secretary General of the Ministry of Energy and Mineral Resources.

    However, not all contractors will receive this special treatment. Only contractors who signed a cooperation contract prior to the regime of Law Number 22 Year 2001 regarding Oil and Gas will receive this privilege.

    The principle of assume and discharge requires the contractor to obtain certainty for the results of oil and natural gas without deducting levies and taxes. Fiscal provisions also apply nail down or are not affected by policies issued by the government.

    Teguh said that currently there are 288 oil and gas cooperation contracts. Of that total, five contracts were signed after Government Regulation No. 79/2010 was enacted. The result is that only 283 companies will get the assume and discharge principle. 

    Meanwhile, the five companies that signed contracts after the Government Regulation on Operating Costs did not assume and discharge. In exchange, the government will provide a number of incentives, such as tax exemptions.

    The ministry also proposes more various revenue-sharing options, such as gross splits and sliding scales. The goal is to make the contract more flexible to the economy in the field.

"The language is not assume and discharge, but tax incentives. The economy is almost the same, "said Teguh.

    Regarding cost recovery, Teguh said, the government must be flexible. Because, if the rules are made too rigid, the discovery of new reserves will be hampered.

"The contractor is worried that the costs will not be reimbursed".

Luhut Binsar Pandjaitan

    Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said the draft revision of Government Regulation Number 79 Year 20 10 had been submitted to the Coordinating Minister for the Economy for signature. Luhut said the revision stated that the Ministry of Energy would grant the authority to provide incentives to oil and gas investors. 

    Previously this authority was in the hands of the Ministry of Finance. In the revision of no tax in the exploration period, fiscal incentives can be provided for the exploitation period with the project economy. According to Luhut, in addition to fiscal incentives, the Minister of Energy can provide non-fiscal incentives.


Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan said he would continue the plan of the Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan to reduce cost recovery. Director of the Indonesia Petroleum Association Marjolijn Wajong complained about the fiscal obligations that have been implemented by the government, such as taxes and levies.

Koran Tempo, Page-14, Wednesday, Oct 19, 2016

National Natural Gas Transmission Pipeline Achieved only 20% of the Target



    The national natural gas transmission pipeline only reaches 2,625 or 20% of the target. PGN Corporate Secretary Heri Yusup said the lack of gas infrastructure has hampered allocations. As a result, only 52% of the gas produced is consumed domestically, while the rest is still exported to increase foreign exchange.

    PGN Corporate Secretary Heri Yusup admitted that currently domestic gas demand is still very low, so producers have opted to export. Moreover, gas is not economical if it is stored for too long, so the gas that has been produced must be distributed as soon as possible. Heri said that if you want to achieve the maximum utilization rate of natural gas, no later than 2024, an additional 15,000 km of gas transmission pipelines and 14 liquidication projects must be built.

    Apart from infrastructure, the target market and the exact amount of demand must also be considered. Currently, the total natural gas pipeline that has been built has reached 13,500 km. About 78% of the existing gas pipelines were built by PGN and the rest are owned by a subsidiary of PT Pertamina, PT Pertagas and 63 units of traders. 

    According to him, the last gas infrastructure to be built is the 1,200 km South Sumatra-West Java (SSWJ) pipeline. Meanwhile, in the 2016-2019 period, PGN will add a natural gas pipeline infrastructure of 1,680 km. The pipelines to be added are the Duri-Dumai-Medan open access transmission, Muara Bekasi-Semarang, the Batam WNTS-Pemping distribution pipe, and several other areas.

    In 2019, the length of PGN's gas pipeline was 8,656 km and natural gas that could be channeled reached 1,902 mmscfd. Heri estimates that by doing so the national savings will reach IDR 88.03 trillion per year. This year PGN has also completed the construction of a gas pipeline in Batam along 18.3 km, Kejayan-Purwosari along 15 km, Jetis-Ploso along 27 km, and Kalisogo-Waru, East Java along 30 km. 

    PGN Corporate Secretary Heri Yusup said the lack of gas infrastructure has hampered allocations. As a result, only 52% of the gas produced is consumed domestically, while the rest is still exported to increase foreign exchange.

    Apart from infrastructure, the target market and the exact amount of demand must also be considered. Currently, the total natural gas pipeline that has been built has reached 13,500 km. About 78% of the existing gas pipelines were built by PGN and the rest are owned by a subsidiary of PT Pertamina, PT Pertagas and 63 units of traders. According to him, the last gas infrastructure to be built is the 1,200 km South Sumatra-West Java (SSWJ) pipeline.

Investor Daily, Page-9, Wednesday, Oct 19, 2016

The Bojonegoro district government plans to clarify about the oil production fund



    The Bojonegoro Regency Government, East Java, plans to clarify by asking the Minister of Finance for information regarding the decline in revenue sharing funds (DBH) for oil and gas from a target of Rp 1.4 trillion to Rp 910 billion.

"We will clarify the reduction in oil and gas DBH revenues directly to the Minister of Finance," said Head of the Regional Revenue Service of the Bojonegoro Regency Government, Herry Sudjarwo.

    He is pessimistic that this clarification step will succeed after seeing the condition of the State Budget (APBN) which has not improved.

"If you look at the state budget conditions this year, it is unlikely that our regions will be able to obtain additional Oil and gas Production Sharing Funds,".

    He mentioned that the Oil and Gas Production Sharing Fund received by the region this year from the Rp. 910 billion target was only around Rp. 600 billion, as of October. Looking at the budget year with only two months remaining, it is unlikely that there will be additional oil and gas DBH transfers from the Government.

"We do not know how to regulate the budget allocation in the Regional Revenue and Expenditure Budget (APBD) which was forced to revise several times due to the decline in oil and gas DBH revenues,".

    He explained that the region last year received oil and gas revenue sharing funds amounting to Rp. 812.7 billion, but in the calculation it turns out that there is still an excess of Rp. 59 billion which is calculated this year.

    Thus the advantage is that the revenue for oil and gas revenue sharing last year was calculated this year so that the target for oil and gas revenue sharing is getting smaller. "The target for oil and gas revenue sharing funds will be reduced, plus there will be cuts in last year's oil and gas revenue sharing fund channel,".

    He added that the target of obtaining land and building tax (PBB) for oil and gas land which was targeted at Rp. 326 billion was also not realized because the acquisition was only Rp. 151 billion. The PBB obtained from oil and gas land, from the PBB land from an old oil well field in Kedewan District, Malo, Cepu Block oil field in Gayam District and Sukowati field, in Bojonegoro City District and Kapas District.

"Yes, the reality is that PBB of land for oil and gas is not on target," the reason for not achieving the acquisition of PBB for land for oil and gas.

    Regent of Bojonegoro Suyoto, previously stated that the oil and gas DBH revenue can no longer be used as a guideline in the preparation of the APBD because it often experiences fluctuations which are influenced by world oil prices and production.

Investor Daily, Page-9, Wednesday, Oct 19, 2016

Cost Recovery will be cut by 30%

To attract investment in the oil and gas sector, the government will reduce cost recovery by up to 30%. The plan to reduce cost recovery is being calculated by the Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan.

Luhut Binsar Pandjaitan

Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said cost recovery could be reduced because world oil prices were weakening. The target of reducing cost recovery this year is the US $ 10.4 billion and next year is lower than that. I am optimistic that Ignasius Jonan and Arcandra Tahar (Deputy Minister of Energy and Mineral Resources/ESDM) can make it better, "said Luhut.

Luhut said cost recovery was reduced by 30% for projects whose contracts have not yet started. The reduction in cost recovery is only about 5% for projects that have signed contracts. He hopes that the cost recovery cut will attract investors to invest in the oil and gas sector.

"Now, foreign investors come with technology and competence. We have to fight with competence in our field, we want to reduce cost recovery.

The government is targeting the revision of Government Regulation Number 79/2010 concerning the cost recovery of oil and gas investment to be completed soon. Discussions on the revision of Government Regulation number 79/2010 between the government and oil and gas players such as the Indonesian Petroleum Association (IPA) have found an agreement.

Secretary-General of the Ministry of Energy and Mineral Resources, Teguh Pamudji, added that the plan to cut cost recovery has been agreed with Commission VII of the House of Representatives (DPR) that the cost recovery in 2017 should be below the US $ 10 billion. He said the plan was indeed being studied. However, he could not reveal further about the study. ESDM Deputy Minister Arcandra Tahar explained that there is still room for cutting cost recovery.

He said, for the signed oil and gas contract, there will be discussions with the contractor. From this discussion, we will find out what parts can be suppressed. He did not want to mention that the cost recovery could be cut by up to 5%.

"The team will see again which parts can be reduced,".

Arcandra revealed, for oil and gas projects that have not yet been signed, such as the Masela Block and East Natuna, have more room to reduce cost recovery. But again he did not want to reveal what the cut was. Chairman of the Indonesian Employers Association (Apindo) in the EMR sector Sammy Hamzah supports the government's plan to reduce the cost recovery in the oil and gas sector by up to 30%. 

He said the reduced cost recovery was able to attract investment interest because the oil and gas contractor's share was better. Sammy said that efforts to reduce cost recovery costs could logically be realized.

This is in line with the low world oil price. This condition causes the cost of supporting services in the oil and gas sector to also decrease. He said that the oil and gas contractor together with the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) must sit together in renegotiating existing contracts.


Blogger Agus Purnomo in SKK Migas

Head of SKK Migas, Amien Sunaryadi, revealed that the high-cost recovery of Cooperation Contract Contractors (KKKS) has been caused by vendor companies who have contracted with KKKS.

"Currently, there are 139 KKKS companies that have contracted with SKK Migas, and I see that the cost recovery is uncontrollable," said Amien.

According to Amien, the incident was caused by each KKKS company using a third party (vendor) in working on oil and gas drilling.

"If you want to drill, it is not the KKKS that will drill, but the KKKS will make a contract with the drilling company. Likewise, if you need pipes, the KKKS will not make the pipes, the KKKS will sign a contract with the pipe supplier. If the KKKS wants to build buildings, facilities, wants to build roads, wants to buy ships, wants anything, it is not the KKKS that builds them. KKKS buy and sign contracts with vendors, ”said Amien.

Amien said, there are thousands of contracts between KKKS and vendors. He admitted that his party had never checked the truth of these contracts.

"The number of vendors is more than 1,500. So there are tens of thousands, maybe hundreds of thousands of contracts between KKKS and vendors. Moreover, up-vendor companies, ".

The former deputy chairman of the Corruption Eradication Commission (KPK) said that each KKKS has so far entered a cost recovery figure based on the amount paid to the vendor. And this amount depends on the contract between the KKKS and the vendor.

"Therefore I can confirm that checking only up to KKKS is useless. If this is not checked properly, then no one can be sure that this contract is efficient. Especially if the contract with the vendor is further spelled out with the possibility that the vendor will contract with the sub-vendor. Then, it could be deeper into sub-vendors with sub-vendors. 

Investor Daily, Page-1, Wednesday, Oct 19, 2016

300 Oil and gas contracts Receive Tax Incentives

About 300 oil and gas cooperation contracts will receive tax relief incentives. Secretary-General of the Ministry of Energy and Mineral Resources (ESDM) Teguh Pamudji said the revision of Government Regulation No. 79/2010 concerning Refundable Operating Costs and Income Tax Treatment in the Upstream Oil and Gas Business Sector will guarantee incentives for these 300 contracts. 

One of the incentive requirements is that the cooperation contract is signed prior to the enactment of Government Regulation no. 79/2010. With the revision of Government Regulation no. 79, the assumption and discharge concept will be applied, which means that the calculation of the state and contractor's share includes the tax component.

Thus, the contractor is no longer subject to additional taxes. In fact, oil and gas contracts should have been signed after the issuance of Law no. 22/2001 on oil and gas, and Government Regulation no. 79/2010 is still subject to additional tax. For the cooperation contracts signed before the oil and gas law and after the oil and gas law, but before the government regulation was enacted, assume and discharge still applies, ".

He detailed that there were around 130 cooperation contracts signed before the issuance of the Oil and Gas Law, such as Blok-Rokan in Riau. In addition, 170 contracts were signed prior to Government Regulation no. 79/2010 is published like the Cepu Block in East Java.

According to him, the government also encouraged oil and gas contracts to be signed after the issuance of Government Regulation no. 79/2010 can get tax breaks. Teguh estimated that there were about four oil and gas contracts signed after 2010 or after the government regulation on cost recovery was issued. He explained that contracts signed after 2010 could not apply the assume and discharge scheme through the revision of Government Regulation No. 79/2010. This is because the provision of tax facilities for the types of local taxes and levies cannot be given because the two types of taxes are not regulated in the regulation.

Teguh said that the implementation of assuming and discharge will facilitate the calculation of the project's economy because contractors are no longer subject to additional taxes that arise for upstream oil and gas activities. However, he considered it should have a positive impact on investors. Not everything is given. There are regional taxes and levies that are not covered.


Blogger Agus Purnomo in SKK Migas

Director of Financial Control for the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Parulian Sihotang, said that until now there has not been any discussion regarding the mechanism for tax returns or refunds after the revision of Government Regulation No.79/2010.

Bisnis Indonesia, Page-30, Wednesday, Oct 19, 2016

Bojonegoro Regency Government To Clarify Oil Production Sharing Funds


The district government of Bojonegoro, East Java, plans to clarify by asking the Minister of Finance for information regarding the decline in Revenue-Sharing Funds (DBH/RSF) for oil and gas from a target of IDR 1.4 trillion to IDR 910 billion. Head of the Regional Revenue Service of the Bojonegoro Regency Government, Herry Sudjarwo, is pessimistic that this clarification step will be successful, after seeing that the state budget has not improved. He said that the oil and gas RSF received by the region this year from the target of Rp 910 billion is still around Rp. 600 billion, as of October.

Looking at the budget year with only two months remaining, it is unlikely that there will be additional transfers of oil and gas RSF from the Government. We do not know how to regulate budget allocations in the Regional Revenue and Expenditure Budget (APBD) which have had to revise several times due to lower oil and gas RSF revenues. He explained that the region last year received an oil and gas RSF of Rp. 812.7 billion, but in the calculation, it turns out that there is still an excess of Rp. 59 billion which is calculated this year.

Thus, the excess revenue from oil and gas RSF last year was calculated this year so that the target for oil and gas RSF recovery is decreasing. The oil and gas RSF target is to decrease, plus there is a cut in the remaining oil and gas RSF channel from last year. He added that the targeted land and gas PBB acquisition target of Rp. 326 billion was also not realized because the acquisition was only Rp. 151 billion.

Bhirawa, Page-8, Wednesday, Oct 19, 2016

Tuesday, October 18, 2016

67 Work Areas Become the Backbone of National Oil and Gas Production

Indonesia's oil and gas production currently depends on 67 Working Areas (WA) that have entered the production phase. SKK Migas Head of Public Relations Taslim Z. Yunus said, as of June 2016, there were 289 oil and gas CAs in Indonesia. Of these, the development plan for 85 oil and gas CAs has been approved and has entered the exploitation phase. Meanwhile, 204 oil and gas CAs are still in the exploration phase.

"Of the 85 exploitation WA, only 67 were producing WA, while the other 18 WAs were still under development, said Taslim.

According to Taslim, the burden of the 67 productions WA is heavy considering that most of them are old fields that have been in production for decades.

"As little as 67 WA are disrupted, national production will be affected," said Taslim.

Taslim added, to strengthen national oil and gas production, stakeholders need efforts and support so that other WA that are still in the exploration and development phase can immediately proceed to the production phase. The government holds an auction for oil and gas in WA every year. After the government determines the winner, SKK Migas as the government representative will sign a cooperation contract with the winning contractor.

Activities began with exploration for commercial oil and gas reserves. If successful, the contractor will prepare a development plan that must be approved by the Minister of Energy and Mineral Resources. After approval is obtained, activities can proceed to the development and production phases. 

All upstream oil and gas activities from exploration to production are supervised and controlled by SKK Migas. This supervision and control aim to maximize the results of upstream oil and gas business activities for the welfare of the people.

Surabaya Pagi, Page-7, Tuesday, Oct 18, 2016