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

Cepu Block Oil Production Reaches 475 Million Barrels

    Cepu Block production managed by Exxon Mobil Cepu Limited (EMCL)  has reached 475 million barrels, exceeding the target in the plan of development/POD of 450 million barrels. The government encourages the development of oil and gas potential in this block so that production does not decrease significantly.

Exxon Mobil Cepu Limited (EMCL)

    The achievement of cumulative production of 475 million barrels is marked by the 700th shipment of oil lifting from the Cepu Block at the floating storage and offloading/FSO tanker ship Gagak Rimang. The volume of oil lifted is 1 million barrels, namely 850 thousand barrels belonging to the government and 150 thousand belonging to the Cepu Block Participating Interest Cooperation Agency (BKS PI). The shipment was led and witnessed directly by the Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif.

Exxon Mobil Cepu Limited (EMCL)

    Arifin said that Exxon Mobil Cepu Limited (EMCL) had previously succeeded in increasing the Cepu Block reserves from the initial 450 million barrels to 940 thousand million barrels. Even from the production level, the oil and gas company originating from the United States was also able to reach more than 200 thousand barrels per day (BPD) from the initial around 160 thousand BPD in 2016. He hopes that Exxon Mobil Cepu Limited (EMCL) can maintain its performance.

"We hope that this capability can continue to be developed to optimize oil and gas production in Indonesia," said Arifin Tasrif. One of them, Exxon Mobil Cepu Limited (EMCL), and partners are expected to continue to develop the oil and gas potentials around the Cepu Block area.

"We hope that the existing potentials can be developed immediately so that they can be used as reserves so that the production process can then be carried out," he said.

Bloger Agus Purnomo in SKK Migas

    Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto added that the Cepu Block had reached a plateau production level with a volume of more than 220 thousand BPD for five years. This realization far exceeds POD with an estimated average production of 165 thousand BPD over two years. 

the Cepu Block by ExxonMobil

    However, as is normal for other oil and gas reservoirs, the Cepu Block production is now starting to decline. However, his party together with Exxon Mobil Cepu Limited (EMCL) continues to strive to maintain Cepu Block's oil production so that it does not drop drastically. 

"Currently SKK Migas continues to oversee Exxon Mobil Cepu Limited (EMCL) with Cepu Block partners to discuss various initiatives to manage the production decline that has begun to occur, including exploring new opportunities in the Cepu Block," said Dwi.

    According to him, there are additional reserves that are ready to be produced of up to 40 million barrels. "In the near term the potential that can be monetized is 40 million barrels, but infill drilling must first be carried out," he said.

    In addition, there is an opportunity to increase the production of the Kedung Keris Field from 10 thousand BPD to 11 thousand BPD. However, exploration drilling is needed to ensure the potential in Kedung Keris. Not only oil, but his party also encourages the monetization of gas potential in the Cepu Block area. 

    This is because the potential for gas reserves in the Cendana and Alas Tua fields is recorded to be very large, around 200 billion cubic feet/BCF with an estimated production of 83 million standard cubic feet per day/MMscfd. Then there is gas potential from several field structures in the Cepu Block, such as Giyanti and Pilang, the amount of which can reach 500 BCF. 

“Gas potential in the future. We hope that Mobil Cepu Limited (EMCL) and Pertamina can optimize this opportunity," he said.

Irtiza Sayyed

    ExxonMobil Indonesia President Irtiza Sayyed said that discussions on opportunities to monetize the potential that still existed in the Cepu block had been carried out intensively. One of the discussions is to ensure the potential reserves of 40 million barrels of oil that are ready to be produced.

"We will do whatever it takes to maximize production and curb production declines," he said.

Nicke Widyawati

    As a partner, President Director of PT Pertamina (Persero) Nicke Widyawati stated that she would fully support efforts to keep Cepu Block production stable.

PT Pertamina (Persero)

"We hope that in the future, the good and solid cooperation that has been carried out so far can be maintained and even increased, given the production level which is estimated to be stable at the level of 200 thousand BPD, so that it can support national energy security," She said.

    Referring to SKK Migas data, this year, the Cepu Block is targeted to produce 219 thousand BPD of oil. Meanwhile, the realization of production as of March 31, was still at 213,251 BPD or 97.4% of the target. 

    In 2020, the realization of Cepu Block production was recorded at 218,194 BPD. Oil production activities at the Banyu Urip Field, Cepu Block have been carried out since 2008 and the main production facilities began operating in the fourth quarter of 2015.

Investor Daily, Page-10, Thursday, June 10, 2021

Cepu Block Backup Optimized

    The government is targeting the potential reserves that are still available in the Cepu Block to prevent a natural decline in production in the working area which is the buffer for national oil production. The Cepu working area, which is operated by ExxonMobil Cepu Limited (EMCL), has recorded crude oil production of 475 million barrels.

ExxonMobil Cepu Limited (EMCL)

    Meanwhile, this production is higher than the estimated total volume of oil reserves produced based on the initial plan of development/POD of 450 million barrels.

the Cepu Block East Java by ExxonMobil Cepu Limited (EMCL)

    Minister of Energy and Mineral Resources Arifin Tasrif said the contribution from the Cepu Block was very large to the achievement of ready-to-sale production or national lifting reaching 30-40 percent. Unfortunately, the water content in the Cepu Block drilling has now increased which indicates a decline in production from the Cepu Block.

"There is another potential of 40 million barrels that must be exploited from around Cepu," he said.

    Arifin hopes that ExxonMobil can optimize oil and gas resources in the Cepu Block and immediately develop existing reserves to be processed into production. According to him, with the total production of the Cepu Block which has reached 475 million barrels, there are still almost half of them, namely 940 million barrels.

"ExxonMobil will take steps, among others optimizing the work in the well to be maintained, then subsurface works will be carried out, more intense programs and also prevent downtime," he said.

Blogger Agus Purnomo in SKK Migas

    Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto said the decline in production in the Cepu Block was indeed due to an increase in the portion of water that came out of oil drilling and an increase in the gas ratio. 

    On the other hand, the Banyu Urip Field is currently at a stable production level at around 220,000 barrels per day. However, with production levels higher than the initial estimate, the Banyu Urip Field also experienced a scientific decline in production.

"Currently SKK Migas continues to oversee ExxonMobil Cepu Limited (EMCL) together with partners to discuss various initiatives to manage the decline in production that has begun to occur," he said.

Nicke Widyawati

    Meanwhile, PT Pertamina (Persero) said it would take part in increasing production in the Cepu Block. Pertamina President Director Nicke Widyawati said the increase in production in the Cepu Block would be pursued through the completion of the Jambaran-Tiung Biru (JTB) project which is being worked on by PT Pertamina EP Cepu (PEPC).

the Jambaran-Tiung Biru (JTB)

"Pertamina is committed to increasing additional production in the block because we realize that in the energy transition plan, the use of gas will be a transition from fuel to NRE," said Nicke Widyawati.

    The project with a total investment value of US$ 1.53 billion is projected to have a peak gas production of 192 MMscfd. The JTB project is said to provide a multiplier effect in providing gas supply for various industrial sectors in Central and East Java. 

    Based on SKK Migas data, in the first quarter of 2021 the progress of project work has reached 88.77%. The realization was still below the target of 98.22%.

    Meanwhile, ExxonMobil Cepu Limited (EMCL) crude oil production in the first three months of this year was recorded at 213,251 barrels per day or only 97.4% of the APBN target of 219,000 bopd.

GOVERNMENT APPRECIATION

    Meanwhile, the government will provide awards for upstream oil and gas contractors who have good performance. Arifin said the Ministry of Energy and Mineral Resources has sent a letter to the Ministry of Finance regarding the plan to provide incentives for existing upstream oil and gas contracts.

    According to Arifin, the provision of incentives is to increase the interest of the cooperation contract contractors to increase their production, especially for old wells.

"Those who work hard and produce good results will be rewarded in the form of incentives," he said.

    Arifin continued that wells that had been exploited for a long time had reduced reserves. It takes a lot of effort to at least maintain production levels and maintain the economy of the field.

"If production can increase, the government's share will also increase," he said.

    In addition to incentives for existing contractors, the government will also provide incentives to attract new investors. The challenge is that international oil and gas companies have a tendency to shift their investment costs to NRE.

    The government seeks to attract investors by providing attractive fiscal policies supported by the provision of data and simplification of licensing.

“Indonesia is one of the most attractive locations in the world for investment in the upstream oil and gas sector. For that, we must be able to open an attractive 'showroom' to be visited," said Arifin.

    Dwi Soetjipto assessed that the incentives to be given would depend on the economic value of the business in the field. In addition, incentives also need to refer to the applicable regulations. Dwi Soetjipto said SKK Migas would review a number of aspects to be able to provide these incentives.

"We'll see which one is the best for the country to increase investment," he said.

    On another development, the government is encouraging the development of methane hydrate as an alternative energy source with low emissions. Methane hydrate gas is believed to be one of the unconventional energy innovations that can substitute the use of conventional oil and natural gas.

    Based on research in 2004, it has been found potential reserves of methane hydrate as much as 850 trillion cubic feet in the offshore area of ​​southern Sumatra to the northwest of Java and in the Makassar Strait, Sulawesi.

    This amount is about eight times the current natural gas reserves so that it can support national energy security for up to 800 years. With the support of further research, the volume of methane hydrate gas reserves in Indonesia is estimated to reach 3,000 TCF.

Bisnis Indonesia, Page-4, Thursday, June 10, 2021

Drilling for the Rokan block continues

 

    PT Chevron Pacific Indonesia and PT Pertamina Hulu Rokan (PHR) continue to target drilling 192 wells in Block Rokan Riau this year.

PT Chevron Pacific Indonesia

    In particular, PT Chevron Pacific Indonesia (CPI) has drilled 55 wells in the production rate containment activities in the Rokan Block which will be transferred to PT Pertamina Hulu Rokan (PHR) in August 2021.

    Managing Director of Chevron Indo Asia Business Unit & President Director of PT Chevron Pacific Indonesia Albert Simanjuntak explained that the drilling program in the Rokan Block is continuing to maintain production levels.

    Since starting at the end of December 2020, according to him, PT CPI has successfully drilled 55 wells, including 11 conversion wells, by operating six drilling rigs and one conversion rig.

    The process of procuring additional rigs is underway to meet the target of drilling 192 wells in the Rokan Block by 2021.

Blogger Agus Purnomo in SKK Migas

"We continue to coordinate intensively with SKK Migas and PHR so that the drilling program can run as expected. The collaboration is very solid because all parties have the same passion and commitment, ”he said in a statement on Monday (17/5).

    For the termination process, CPI has completed the PSC provisional checklist termination document on February 25, 2021. It has reached 81% for asset reporting, with approximately 109,000 assets that have been physically inspected and reported. The closure of project reports reached 70% or around 2,940 reports that have been completed.

    Currently, the process of verification and validation (V&V) of exploration and exploitation data of the Rokan Block is underway by the Center for Data and Information Technology (Pusdatin) ESDM and SKK Migas as part of monitoring.

    The V&V process was carried out on approximately 1 million items of printed documents, magnetic and optical media, and rock samples. The process is expected to be completed this month.

“The CPI team continues to work hard to realize a safe, reliable, and smooth termination and transition process. The Rokan block is a strategic asset that is important for state and regional revenues, the community's economy, and national energy security, "he said.

    Albert said the CPI is also trying to ensure the readiness of its employees. Meanwhile, CPI has submitted all personnel and organizational data to SKK Migas.

    

the Rokan Block

    Along with the transfer of management of the Rokan Block, almost all CPI employees will change their employment status to the new operator.

    In preparing its employees, CPI has prepared organizational capabilities, held various communication forums and debriefing programs. The provisioning program includes technical preparation for transitions, positive mental development in facing change to financial management.

    According to him, the Rokan Block's solid performance so far cannot be separated from the human resource factor behind it, namely employees with built-in expertise, culture, and work ethic.

"We are optimistic that they will be able to maintain the performance of the Rokan Block and can contribute significantly to new companies," said Albert.

    Reforminer Institute founder Pri Agung Rakhmanto asked that all preparations for the transition period of the Rokan Block must be matured so that later it does not interfere with production operations.

    At least, three crucial points need to be considered during the transition period for managing the Rokan Block. First, related to legal issues that must be resolved.

"Of course everything related to the legal basis must be completed because this is the basis for everything. In this regard, I think the process is relatively smooth, ”he told Bisnis.

    Second, things related to operational activities must be ensured that they continue to run well. He explained that production operations must continue and continue without any vacancies.

    Third, related to management. During the transition period, it is necessary to ensure that the new management can ensure that operations can continue to run smoothly and can manage properly in maintaining the level of investment, reserves, and ultimately production.

    According to him, finding partners by PHR, a subsidiary of PT Pertamina to work on the block, is a management problem.

"Later the new management will and need to assess all of it," he said.

NEED TO PARTNER

    Executive Director of the National Oil and Gas Companies Association (Aspermigas) Moshe Rizal explained that the most crucial thing in managing the Rokan Block is how Pertamina gets a strong partner with strong funding and operational capabilities, as well as strong technology.

    With great responsibility to oil and gas fields throughout Indonesia, he added, Pertamina's capacity is limited. This limitation can be seen in terms of funds and operational capabilities. To maximize production, he suggested that Pertamina should not work on the Rokan Block itself.

    He argues that there needs to be aware of its capacity and put aside political egos in the national interest so that the block is not in the same boat as the Mahakam Block, which has experienced a decline in production after being transferred to Pertamina.

"Must be willing to cooperate in terms of operations, at least joint operatorship, and perhaps also offer most of the PI," he explained.

Basuki Tjahaja Purnama AKA Ahok

    Previously, Pertamina President Commissioner Basuki Tjahaja Purnama was reviewing several oil and gas fields owned by the company to be used as a reference in managing the Rokan Block.

    The man who is familiarly called Ahok revealed that his party did not want to make the Rokan Block's fate when it was transferred to management, not to experience a decline in production as happened in the Mahakam Block.

The Cepu Block Exxonmobil

    Previously, Ahok visited Cepu Block, East Java to compare oil and gas blocks managed in collaboration with strategic partners with oil and gas blocks that are managed independently.

"Why can Banyu Urip become the pride of Indonesia's oil field with low production costs? Is it because Pertamina is only 45% and Exxon as a partner has excellent management and technology? They train and transfer technology very well for our nation, ”he said recently.

    Ahok said that Banyu Urip's field performance was considered very good. This is evidenced by the absence of oil spills of more than 1 barrel of oil and no lost time incidents since February 2016, and uptime of over 99% with production costs below the US $ 2 per barrel.

    According to Ahok, the results of the study from the Banyu Urip field will be implemented in the Rokan Block field and other oil and gas blocks managed by Pertamina. However, Ahok was reluctant to reveal the potential partners for the Rokan Block.

"We do not want the Wells blocks taken by Pertamina, such as the incident in Mahakam, not to be repeated in Rokan. Do it yourself, if not better, there must be a solution, "he said.

Bisnis Indonesia, page-4, Tuesday, May 18, 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

Global Oil and Gas Company Tighten the Belt

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

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

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

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

Michael K. Wirth

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

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

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

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

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

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

Cameron Van Ast

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

the IDD project Chevron

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

Dwi Soetjipto

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

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

The government is advised to invite oil and gas junior companies

The government is advised to invite junior companies (small companies) that focus on oil and gas exploration activities. This is because the discovery of significant oil and gas reserves is the key to achieving the target of producing 1 million barrels of oil per day (BPD) by 2030. 

       Practitioners of Oil and Gas Tumbur Parlindungan revealed that large oil and gas companies rarely voluntarily disburse large funds for large-scale exploration activities. This can be seen from the lack of large oil and gas companies participating in the management of new oil and gas blocks through auctions held by the government.

For this reason, he advised the government to invite junior companies to look for potential oil and gas reserves in the country. This is because, in the world, junior companies usually focus on finding oil and gas reserves to be sold to large oil and gas companies. He gave an example, the discovery of large gas at Tangguh was actually carried out by Arco. However, BP, which is now the operator there, acquired the company.

"We need to invite small companies but want to take exploration risks. We need pioneers who want to drill, we need players who want to play exploration, big companies focus above 100 million barrels and above, "said Tumbur.

According to him, data on oil and gas reserves owned by Indonesia are currently difficult to compete with other regions. At present, large oil and gas companies are actually targeting Africa, which has proven oil and gas reserves in large quantities. This will only happen in Indonesia if there are 11 proven huge oil and gas reserves.

"The company will come if the reserves are proven large," said Tumbur.

Tumbur explained, large companies such as Shell, Chevron, Exxon, and Total would not be interested in oil and gas reserves whose volumes were less than 100 million barrels of oil equivalent. 

Furthermore, companies such as HESS, ConocoPhillips, and National Oil Company (NOC) such as Petronas, PTTEP Thailand, Repsol, will only glance at one area if the reserves are more than 50 million barrels of oil equivalent. 

In fact, he continued, the flow of foreign investment funds is very important so that exploration activities can run massively in Indonesia.

Blogger Agus Purnomo in Petronas PC Ketapang

"We see that our oil and gas block auction is not very large, so it will not be in demand by large companies," he said.

Repsol

On the other hand, the success of finding oil and gas reserves (success ratio) in Indonesia is still less than 50%. This could also be an obstacle to achieving the 1 million BPD oil production target. He gave an example, the findings of oil and gas in Ande-Ande Lumut could be one of the big findings, but the problem of monetization and the use of technology could hamper its development.

Referring to the data of the Ministry of Energy and Mineral Resources (ESDM), the number of the signing of production sharing contracts (PSCs) from oil and gas block auction results has been relatively low since 2015. In 2015, the government signed 8 PSCs. But afterward, although the auction was still held, in 2016-2017, not a single PSC was signed. Furthermore, as many as 11 PSCs were signed in 2018 and 6 PSCs last year. In fact, the signing of the PSC in Indonesia touched 26 contracts in 2011.

Inline, the realization of national oil and gas exploration investment has also been relatively low since 2015. In 2015, the realization of exploration investment was recorded to still reach the US $ 970 million. However, this exploration investment continues to decline to the US $ 916.2 million in 2016, US $ 576.55 million in 2017, and rose to the US $ 786.18 million in 2018. In fact, exploration investment in Indonesia once touched the US $ 3, 05 billion in 2013.

Must be planned

Another strategy from the government to reach the target of 1 million BPD is through enhanced oil recovery (EOR) activities. According to Tumbur, this EOR activity must be planned from the beginning in the development of an oil and gas block. The reason is that EOR activities will not be effective and will require large costs if they are only carried out when the oil and gas reserves of an oil and gas block are almost gone.

"During the decline, the energy strategy has been lost. If it was only EOR at that time, the cost was more expensive. EOR continues improvement, there are pilots from the start. If it's already [production] road it's difficult to run, "said Tumbur.

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) once made an additional projection of oil production from EOR activities. Referring to the projection, the newly initiated EOR activities can significantly increase oil production starting in 2025. Referring to the data, national oil production is projected to only be 281 thousand BPD by 2030 if no EOR activities are carried out. However, if the EOR is successfully implemented, oil production can be bent to 520 thousand BPD that year.

However, at present, the EOR activities are still in the pilot phase. PT Pertamina (Persero) through Pertamina EP has implemented EOR in Tanjung Field. The company has also signed the points of understanding between Pertamina and Repsol for full-scale management, including the implementation of surfactant-polymer EOR. In the Jirak and Rantau Fields, Pertamina is conducting a study of the application of surfactant chemicals for the implementation of EOR in both fields.

Furthermore, related to CO2 flooding, Pertamina is currently conducting studies in several fields, namely Jatibarang, Sukowati, and Ramba. Pertamina also expanded this EOR activity to the oil and gas block managed by PT Pertamina Hulu Energi (PHE), namely in the North West Java Offshore Block, precisely in the Zulu Field and E-Main. In addition, in the near future the Batang field, which is operated by PHE Siak, will be an EOR steam flooding pilot project.

Investor Daily, Page-9, Thursday, May 9, 2020

Cepu Block EIA Revision Will Be Completed Soon

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) is optimistic that the revision of the Cepu Block Environmental Impact Analysis (EIA/Amdal) will be completed soon. Environmental Impact Analysis revision is needed so that oil production from the Cepu Block can be increased to 235 thousand barrels per day (BPD).

Deputy Head of SKK Migas Fatar Yami Abdullah said the local government's response to the proposed revision of the Cepu Block Environmental Impact Analysis was very good. Now the proposed Amdal revision of Exxon Mobil Cepu Limited (EMCL) has been fully discussed at the local government level.

the Cepu Block Exxon Mobil Cepu Limited (EMCL)

The Head of SKK Migas Dwi Soetjipto explained that Exxon Mobil had conducted a trial and the results of the Cepu Block production facility were stated to be able to produce oil up to 235 thousand BPD in safe conditions. 

     However, the increase in production of the Cepu Block is still awaiting approval of the revised environmental impact analysis (EIA). Because the current EIA only lists a maximum production of 220 thousand BPD.

As long as the Environmental Impact Analysis revision approval has not yet been obtained, oil production from the Banyu Urip Field had to be reduced due to the operation of the Kedung Keris Field. 

    This is so that operations in the Cepu Block do not violate the existing EIA. Oil production from the two fields can only be optimized after the new AMDAL is approved. So it cannot ascertain when the Kedung Keris Field reaches peak production.

Azi N Alam

Vice President of Public and Government Affairs of Exxon Mobil Indonesia Azi N Alam stated that his office continues to seek approval for the revision of the Cepu Block Environmental Impact Analysis. He continued to coordinate with the Ministry of Energy and Mineral Resources, SKK Migas, Ministry of Environment and Forestry (KLHK), and the Bojonegoro Regency Government.

the Cepu Block Field

The problem of the revision of the Cepu Block EIA which was not immediately approved by the Bojonegoro Regency Government was raised in a meeting of the House of Representatives Commission VII with the Cooperation Contract Contractor (KKKS). Not only that the Minister of Energy and Mineral Resources Arifin Tasrif previously also highlighted the problem of the slow approval of this Amdal revision.

Arifin explained that the Cepu Block has an important role in increasing national oil lifting. Moreover, President Joko Widodo is tasked with increasing national oil and gas lifting. Therefore the EIA approval process is a way to increase national oil lifting considering the Cepu Block contributes 30% of the national lifting.

In 2020, the national oil and gas lifting was set at 1.95 million boepd, up slightly from last year's realization of 1.8 million boepd. Specifically, oil production rose to 755 thousand BPD and the realization of 746 thousand BPD and gas to 1.19 million boepd from the realization of 1.06 million boepd.

Investor Daily, Page-9, Monday, Feb 24, 2020