The Efficiency of the Rokan Block Oil Pipeline Project

    PT Perusahaan Gas Negara Tbk (PGN) has made the efficiency of the oil pipeline project in the Rokan Block a new standard for infrastructure projects it undertakes, especially in implementing National Strategic Projects (PSN). 

    President Director of PGN Suko Hartono stated that the PGN Group is committed to striving for the best support for PT Pertamina's Oil and Gas Holding so that the transition process for the management of the Rokan Block runs smoothly and can increase the achievement of financing efficiency.

The Rokan Block

    In principle, the Rokan oil pipeline project is an effort to boost efficiency in Indonesia's energy budget, in line with the government's efforts to reduce oil imports. In addition, the Rokan Pipe project is an effort to support the Government's program in increasing the lifting and effectiveness of oil distribution from the Rokan Block, which is the backbone of national petroleum production, as well as one of the largest oil blocks in Indonesia.

    With competence in developing oil and gas infrastructure and distributing energy both natural gas to all sectors, PGN seeks to improve the effectiveness and efficiency of energy distribution. The Rokan oil pipeline is one of the biggest energy projects this year which has successfully implemented a budget efficiency of Rp 2.1 trillion.

    This is in line with pandemic conditions that require a high level of efficiency in the implementation of investment and operation activities. In addition, the Rokan oil pipeline project also involves 60% of local workers, so that it can provide great benefits to the surrounding community for economic recovery during the pandemic. The estuary of this investment operation is also aimed at driving the wheels of the regional and national economy.

"Regarding the selection of partners and partner schemes for the Rokan Oil Pipe Construction Project, the process is still under internal review by Pertagas as a subsidiary of PGN. PGN as the parent and Subholding Gas is committed to the implementation and completion will be on time. As for project implementation, it is adjusted to the ongoing process, and in accordance with project implementation rules. We appreciate the attention of many parties regarding this national strategic project to take place immediately and we ensure that the project preparation process is nearing its final stage so that it can be implemented immediately, "said Suko Hartono.

    Suko explained that the financing scheme for the Rokan Pipe construction project had been carried out in accordance with a study of the economic principles of a project. The review process is carried out in accordance with internal procedures that have involved elements of the Board of Directors and Board of Commissioners by prioritizing GCG principles.

    PGN is open to safe reporting through a whistleblower mechanism if there are things that are not in accordance with the principles of GCG in the company. With this mechanism, the reporter is guaranteed protection if he finds or suspects non-transparent activity at PGN. 

    Reporting obtained from the Whistle Blowing System (WBS) mechanism will receive attention and follow-up, including the imposition of appropriate penalties or sanctions in order to provide a deterrent effect for perpetrators of violations and for those who intend to do so. PGN opens access to reporting on actions that are detrimental to the company/environment/community through https://wbs.pgn.co.id

Investor Daily, Page-10, Thursday, Oct 22, 2020

PGN Supports the Regional and National Economy in the Rokan Oil Pipe Project

    The PT Perusahaan Gas Negara Tbk (PGN) group is committed to providing the best support for the Oil and Gas Holding of PT Pertamina (Persero) so that the transition process for the management of the Rokan Block runs smoothly and can increase the achievement of financing efficiency. This was done through the implementation of the Rokan Oil Pipe National Strategic Project (PSN).

    In the construction of the Rokan Oil Transmission Pipe, PGN is targeting to have a positive impact on regional development. This is because the development of this national strategic project involves more than 60% of the scope of construction and local manpower.

"With the development that involves local resources, it is hoped that the multiplier effect will be able to contribute significantly to increasing human resource capacity and transfer of knowledge in the regions," said PGN President Director Suko Hartono.

    According to Suko, empowering local entrepreneurs and workers also supports the economic empowerment of local communities during times of crisis. Then the knowledge transfer that is expected to occur can provide benefits in human resource management, especially in the aspects of technological and commercial understanding in the construction of the Rokan Oil Pipe.

"The construction of the Rokan Oil Pipeline Project is a strategic project that is full of risks and costs a lot, so it requires increased mastery of technology and a good understanding of the commercial aspects. These two aspects are the main benchmarks so that the results can be optimal and provide broad benefits, "added Suko.

    Through PT Pertagas as the executor of the construction, cooperation has been made in the procurement of steel pipe material for the Rokan Oil Pipe with PT Krakatau Steel. From this collaboration, it is targeted to reduce the cost of material procurement by 16% and provide added value to the domestic steel industry because it is an effort to increase the use of domestic products (P3DN).

the Rokan by Chevron

"In principle, the construction of the Rokan Oil Pipe is an effort to boost efficiency in the energy budget in Indonesia, in line with the government's efforts to reduce oil imports. "With a Capex value (capital expenditure) of US $ 300 million, the efficiency optimization obtained is the US $ 150 million or around Rp 2.1 trillion, because the initial Capex allocation value was the US $ 450 million," said Suko.

PT Chevron Pacific Indonesia (CPI)

    This project was built to maintain the resilience of energy production after transferring the management of the Rokan Hulu Block from PT Chevron Pacific Indonesia (CPI) in 2021.

"The PGN group as Pertamina's Subholding Gas is committed to being part of the solution for national energy fulfillment. With our competence in developing oil and gas infrastructure and distributing energy both natural gas to all sectors, we strive to improve the effectiveness and efficiency of all energy supply chains. In addition, the implementation of investment operations is always aimed at moving the wheels of the regional and national economy, especially in a very challenging period during the current pandemic economic recovery, "said Suko.

Investor Daily, Page-10, Monday, Oct 19, 2020

Completing the Pertamina Refinery Project Requires Investors

Refinery investment reaches the US $ 40 billion

PT Pertamina (Persero) needs partners in funding all fuel refinery projects targeted for completion in 2026-2027. This is because the company's finances are unable to finance the investment needs of the refinery project, which is estimated at the US $ 48 billion.

Director of PT Pertamina International Refinery Ignatius Tallulembang said, as the Processing and Petrochemical Subholding of Pertamina, it was targeting to become the best processing and petrochemical company in the Southeast Asia region. 

    This was achieved by increasing Pertamina's refinery capacity to 1.8 million barrels per day (BPD) or the largest in the region. Investment needs to increase the capacity of the refinery from the current 1 million BPD to 1.8 million BPD, he said, reached the US $ 48-50 billion.

"If you use Pertamina's own funds, of course, you can't. So in building a refinery, Pertamina really needs a partner. Because in addition to funding shares, risk-sharing can be shared, "he said.

Tallulembang explained, in the partnership the company will also continue to issue cash. However, financing refinery projects will also be borne by partners. Pertamina opened two partnership schemes, namely strategic partners (strategic investors) and financial (financial investors).

"The point is that this strategic investor is a well-known oil and gas company and has built refineries. Usually, they are involved from the start, they will bring technology and expertise. They also usually have special requirements, for example offering crude oil or joint marketing, "he explained.

Furthermore, financial partners are usually only involved in funding. According to Tallulembang, the financial partners did not intervene too much on the project and gave Pertamina the flexibility to run its business.

"The important thing is the profit we will share [with financial partners] when dividend distribution," he said.

Rosneft Oil Company Russia

So far, Pertamina has partnered with Rosneft Oil Company as a strategic partner in the Tuban Refinery Project in East Java Province. Then, Pertamina has partnered with K-Sure and Exim Bank of South Korea as financial partners and is exploring similar cooperation with Mubadala Investment Company.

But the company is also still looking for partners to complete the Bontang Refinery Project in East Kalimantan Province and Cilacap Refinery in Central Java Province. 

    Pertamina was assigned by the government to work on the Balongan Refinery Project in West Java Province, Balikpapan Refinery in East Kalimantan, Bontang Refinery also in East Kalimantan, Cilacap Refinery in Central Java, and Tuban Refinery in East Java.

Mubadala Investment Company.

After the entire refinery project is completed in 2026-2027, in addition to the processing capacity increasing to 1.8 million BPD, the refinery will also produce 1.5 million BPD of fuel and 8,600-kilo tons of petrochemical products per annum.

Private Role

Not only the partnership scheme, Tallulembang added that the development of national refineries can also be done by involving the private sector or through the Cooperation between the Government and Business Entity (KPBU). This scheme has been regulated in a law, where private business entities can work together to build refineries with Pertamina as the person in charge.

"Unfortunately this scheme has not yet been used even though it is very possible, and Pertamina can take products from refineries built. The government as an off-taker when domestic energy demand is still high is still needed, "he said.

The Director of Oil and Gas Engineering and Environment of the Ministry of Energy and Mineral Resources (ESDM) Soerjaningsih revealed, since 2001, many national private companies have obtained permits to build fuel refineries. However, the huge investment costs, high technology, land issues, crude oil supply, and product off-takers are constraints so that not even one refinery has been realized.

In the assignment of refinery construction to Pertamina, the government opened up opportunities for cooperation for domestic and foreign companies.

"So Pertamina can partner with private entities, domestic and foreign, it is possible for that. We also provide many facilities, both for the assignment scheme and the PPP, "said Soerjaningsih.

Funding facilities include state capital participation (PMN), retained earnings, government loans, bond issuance, and loans with government guarantees. While the fiscal incentives include a 100% Tax Holiday, taxes in the framework of imports, as well as income tax facilities.

Chairman of the Association of Oil and Gas Companies (Aspermigas) John S Karamoy said many national private entrepreneurs were interested in building small-capacity refineries or mini-refineries. 

   However, he admitted that the refinery development plan met with many obstacles, one of which was the certainty of off-takers or buyers of refinery products. This can be overcome if the private refinery business gets a processing deal or a processing agreement from Pertamina.

"Private refineries that will be built can also be accelerated, which is important to get a processing deal, namely this refinery will process only where Pertamina's ready-to-sell products and refinery owners only get processing fees [processing fees]," he explained.

He said he was pushing for plans to build mini refineries in eight clusters again. Because the plan was announced by the government a few years ago, but it hasn't started yet. These eight clusters are North Sumatra, Maluku Long Strait, Riau, Jambi, South Sumatra, South Kalimantan, North Kalimantan, and Maluku.

"We, together with Regionally Owned Enterprises, want to realize and hope that the eight units can be completed in 2027," said John.

Investor Daily, Page-10, Monday, June 29, 2020

2019, Pertamina Oil and Gas Production 901 BOEPD

PT Pertamina (Persero) recorded oil and gas production last year of 901 thousand barrels of oil equivalent per day / BOEPD, below the target set by 922 thousand BOEPD. However, the company was able to increase its oil and gas reserves to 309 million barrels of oil equivalent or 44% higher than the target.

   

     Pertamina Corporate Communication Vice President Fajriyah Usman said the company focused on working on the oil and gas blocks it manages to improve the performance of the upstream business.

Last year, the company succeeded in realizing 322 development wells and 14 exploration wells, carrying out 751 wells and maintaining 13,683 wells. So that the realization of oil and gas production last year was 901 thousand BOEPD.

"The oil and gas production of 901 thousand BOEPD is 414 thousand barrels per day (BPD) of oil and 487 thousand BOEPD of gas," She said

The realization of Pertamina's production is below the target set at 922 thousand BOEPD. For the realization of oil production, recorded in accordance with the target 414 thousand BPD. However, the realization of gas production of 487 thousand BOEPD was only 95.87% of the target of 508 thousand BOEPD.

Meanwhile, when compared to the 2018 performance, the realization of the company's oil and gas production declined. Because, in 2018, Pertamina managed to book oil and gas production of 921 thousand BOEPD. 

    The company's gas production last year was lower than in 2018 which amounted to 529 thousand BOEPD. However, the company's oil production last year rose 5.6% compared to 2018 which amounted to 392 thousand BPD.

Fajriyah explained, the company's oil and gas production was less than optimal due to technical obstacles that occurred in a number of production facilities. One of the obstacles is the lack of optimum compressor facilities in Pertamina's assets in Algeria, which is managed by PT Pertamina Internasional EP (PIEP) due to the high ambient temperature conditions.

"But what needs to be noted is that even without a substantial acquisition, in 2019, Pertamina was able to withstand the decline in oil and gas production by carrying out various activities such as drilling well development and aggressively reworking wells," She said.

She hopes the company's oil and gas production performance in the coming year will continue to increase. In addition to domestically, Pertamina is also actively producing oil and gas from its 13 oil and gas fields spread across Asia, America, and Europe.

In 2019, the realization of the oil production of foreign assets was recorded at 104 thousand BPD and 273 million standard cubic feet per day / MMSCFD gas. This step is Pertamina's effort to achieve national oil production of 1 million BPD and 4,000 MMSCFD of gas. 

      Meanwhile, in the new and renewable energy sector, Pertamina's geothermal production in 2019 reached 4,292 gigawatt-hours (GWh), up 3% compared to 2018 which recorded 4,182 GWh.

Investor Daily,  Page-10, Tuesday, June 23, 2020

See Pertamina's New Structure

Friday, June 12, 2020, became a special day for PT Pertamina (Persero), because at that time through the General Meeting of Shareholders (GMS) held virtually during the Covid-19 pandemic, the structure of this oil and gas BUMN changed.

Although there have been many speculations circulating before, starting from the very hot one, namely the issue of replacing the President Director to the changes in the composition of the directors, the results gave many surprises. The government decided to keep Nicke Widyawati as President Director. For this, the government has its own reasons.

Nicke Widyawati

"So far, Nicke Widyawati is still the best as Pertamina's Managing Director, because it is able to carry out the tasks assigned," said SOE Minister Erick Thohir.

SOE Minister Erick Thohir

The government has also streamlined the number of directors from 11 to six, and the nomenclature of the position of directors of the state-owned oil and gas company has also been changed namely the finance director, director of logistics and infrastructure, director of human resources, director of business support and director of the portfolio strategy and new ventures.

What made the public ask was when the AGM abolished the positions of upstream director, corporate marketing director, retail marketing director, processing director, and director of processing and petrochemical megaprojects.

No wonder, considering that this position is very strategic for Pertamina which incidentally has a core business in the oil and gas sector. In addition, Pertamina also has a 'big project' which is building a number of oil refineries. However, it turns out the government wants the special business to be handled by a subsidiary (sub-holding).

"The establishment of this sub-holding is to integrate Pertamina's business which is handled by a number of its subsidiaries to become one focus," said Erick.

Fajriyah Usman

Pertamina Corporate Communication Vice President Fajriyah Usman explained, as holding Pertamina's duties would be directed at managing portfolios and business synergies throughout the Pertamina Group, accelerating the development of new businesses and running national programs.

Whereas the sub-holding will play a role to encourage operational excellence through the development of scale and synergy of each business, accelerate the development of existing business and business capabilities as well as increase the ability and flexibility in partnership and funding that is more profitable for the company.

Through this new structure, Pertamina is expected to become more agile, focused, and faster in developing world-class capabilities in its business. This is expected to accelerate the growth of the business scale to become a leading global energy company with a market value of US $ 100 billion and to be a driver of social development in 2024. 

    Energy Watch Executive Director Mamit Setiawan assesses the change in nomenclature within the new organization in Pertamina, as the efforts of the Ministry of SOEs in making Pertamina more efficient and better.

Sub Holdings

The five sub-holding companies are upstream sub-holding whose operations are handed over by PT Pertamina Hulu Energi (PHE), gas sub-holding by PT Perusahaan Gas Negara (PGN) Tbk, processing and petrochemical sub-holding by PT Kilang Pertamina International, electricity holding sub-companies and renewable energy by PT Pertamina Power Indonesia, PT Patra Niaga's commercial and marketing sub-holding, and shipping sub-holding by PT Pertamina International Shipping.

     Pertamina President Director Nicke Widyawati said that the transformation was carried out to prepare Pertamina's business lines to develop and be independent. Because at present Pertamina's business scope is very broad with different challenges and competitions and has specific risks of each.

"Therefore, with this sub-holding, every business can move faster and agile to develop world-class capabilities and business scale growth that will support Pertamina to become a leading global energy company with a market value of US $ 100 billion," said Nicke.

If you pay attention, the composition of Pertamina's sub-holding is not much different compared to that of other foreign oil and gas companies such as Petronas Malaysia and PTT Thailand. 

   In Petronas for example, there are 5 sub-holding companies including Upstream namely Petronas Carigali, International Business namely Petronas International Corporation, Downstream Business namely Petronas Chemical Group Berhad, Marketing, and Trading Business by Petronas Trading Corporation, and Power Business by Petronas Power. Regarding this matter, Mamit considers that there are indeed similarities with Petronas.

"Yes, I see it almost the same concept," he said.

He also agreed if one of the sub-holding conducted an IPO.

"Petronas has a shipping sub-holding named MISC Berhad and has an IPO and has now traveled everywhere," he said.

Another innovation made by the government and Pertamina is to place a number of young workers in strategic sub-holding positions. One of them, Mars Ega as Director of Business Planning and Development in the Commercial and Trading sub-holding. This 41-year-old young man said that this was a big challenge.

"But it must be realized that sooner or later a company needs regeneration, so what is more important is that every young worker must prepare well to become a successor to the company's management," he said.

He felt the benefits of Pertamina's talent development programs, especially in developing business and leadership competencies.

"This also shows that the company does not only look at the seniority side in the process of determining the position, hopefully, but this can also be an encouragement for other friends to make more achievements," he explained.

Investor Daily,  Page-12, Wednesday, June 17, 2020

The Pertamina Refinery Complete Project Targeting Solar Export Opportunities

PT Pertamina (Persero) states that there is an opportunity to export diesel fuel to the Asia Pacific market, including Australia and New Zealand, once all refinery projects are completed in 2026-2027. Therefore, it is still important to proceed with the refinery project.

Pertamina Megaprojects Processing and Petrochemical Director Ignatius Tallulembang said, after all, refinery projects had been completed, Indonesia would be able to meet all national fuel needs, aka no more imports. In fact, for diesel fuel, his side projects an excess of production that can be exported.

"Solar will exceed their needs. But if you look at supply-demand in the region, such as Australia and New Zealand, they are in deficit and this is our opportunity to export diesel after the refinery project is completed, "he said at an online press conference last weekend.

He explained, although the Asia Pacific region, in general, would have an excess supply of diesel up to 1.06 Million Barrels Per Day (BPD), not all countries are able to meet their own needs. Based on the data used by the company, there are five countries that are projected to have a shortage of diesel in 2030, namely Vietnam, the Philippines, Papua New Guinea, Australia, and New Zealand.

According to these data, Australia will have a solar deficit of up to 427 thousand BPD, followed by the Philippines 152,000 BPD, Vietnam 104 thousand BPD, New Zealand 40,000 BPD, and Papua New Guinea 23,000 BPD. On the other hand, in 2030 after the refinery upgrading and upgrading project construction has just been completed, Pertamina's diesel production is estimated to be around 600 thousand BPD with domestic needs below 500 thousand BPD.

"So, excess diesel is not a problem, because it can be exported to countries that need it," Tallulembang said.

The refinery project also needs to be continued to improve the competitiveness of refineries because the technology of refineries in Indonesia is out of date. National refineries have lower complexity compared to refineries in other more modern countries. As a result, the yield or conversion rate to refinery value products in Indonesia is only around 75% compared to modern refineries which have reached 95%.

"The economics of our refineries are lower. This is because the technology used by the old technology is unable to compete, "he said.

Though referring to the same data, in the Asia Pacific there are countries that also have a very large excess of solar production. Some of these countries are China with a volume reaching 639 thousand BPD, South Korea 491 thousand BPD, Singapore 220 thousand BPD, and Japan 110 thousand BPD.

After the refinery upgrading project, Pertamina targets the national refinery product yield to increase to 95%. Not only that, but the fuel produced will also have a quality equivalent to EURO V.

Stop importing petrochemicals

Not only targeting foreign markets, Tallulembang said, excess diesel can also be used to produce petrochemical products. Moreover, Indonesia is still very dependent on imports to meet the needs of domestic petrochemical products, namely polyethylene, propylene, and paraxylene and benzene.

This is because the company's refinery project is integrated with petrochemical facilities. Two new 300 thousand BPD refineries built by Pertamina in Tuban, East Java Province, and Bontang, East Kalimantan Province, will be equipped with petrochemical processing. In addition, the company is also building a crude oil processing complex into petrochemical products in Balongan, West Java Province with China Petroleum Corporation (CPC).

China Petroleum Corporation (CPC), Taiwan

"From the material balance of the refinery project, we can meet the needs of [petrokima] in the country and eliminate imports altogether," Tallulembang said.

From the company side, the petrochemical business is still very promising in the future. From the results of Pertamina's study and evaluation, the plan to build a refinery will provide added value or profitability for both the company and the country.

Referring to Pertamina's data, the petrochemical production capacity in 2018 is far from needed. Specifically, polyethylene production was recorded at 806-kilo tons per year (kilo tons per annum / KTPA) from the needs of 1,791 KTPA, then propylene production of 903 KTPA from the demand of 1,745 KTPA, and paraxylene and benzene 560 KTPA from the needs of 1,324 KTPA.

While in 2030, the production of polyethylene increased to 3,868 KTPA, propylene 4,378 KTPA, and paraxylene and benzene 1,918 KTPA. On the other hand, the needs of these three types of petrochemical are projected below production capacity, namely 3,459 KTPA for polyethylene, 3,240 KTPA for propylene, and 1,810 KTPA for paraxylene and benzene.

Investor Daily, Page-10, Tuesday, June 9, 2020.

Pertamina and Taiwan's CPC work on the Petrochemical Industry in Balongan

Pertamina and CPC Taiwan agreed to follow up the cooperation in the development of the Integrated Petrochemical Industrial Complex in Balongan, West Java Province, with an investment of US $ 8 billion.

CPC COrporation,Taiwan

This was marked by the signing of the head of agreement (HOA) by Pertamina Urama Director Nicke Widyawati and the President & CEO of CPC Corporation Taiwan who were symbolically represented by Mr. Ming-Huei Chen, CPC Corporation's Vice President, last week. 

     

Nicke Widyawati

      Previously, discussions on this project had been initiated by Pertamina and CPC Taiwan since the end of 2018. And was followed by the signing of a framework agreement and joint Feasibility Study since mid-2019.

Mr. Ming-Huei Chen

"This collaboration was formed because of a long and deep negotiation process. Therefore, we appreciate the efforts of Pertamina and CPC. Project this is the government's priority. We will fully support. We gave the tax holiday confirmation yesterday, "said BKPM Head Bahlil Lahadalia.

Nicke Widyawati

Pertamina President Director Nicke Widyawati asserted that as a national oil and gas company, Pertamina is committed to realizing a strong petrochemical industry in Indonesia. Therefore, it can meet domestic needs and help reduce imports of petrochemical products.

"This project is an important history to strengthen the petrochemical business portfolio so that within the next 10 years, Pertamina can become a major player in the petrochemical business in the Asia Pacific region, "Nicke said.

It is hoped that CPC's experience and expertise in the petrochemical field can help Pertamina to accelerate the development of an integrated petrochemical business with RDMP and GRR megaprojects.

"Going forward, Pertamina together with the government and Taiwan's CPC will continue to strengthen cooperation to complete the project targeted to operate in 2026," concluded Nicke.

Media Indonesia, Page-10, Monday, June 8, 2020.

Pertamina-Aramco Officially Split

Pertamina is more focused on the construction or development of existing refineries. PT Pertamina (Persero) officially parted ways with Saudi Aramco in developing the Cilacap Refinery Development Master Plan (RDMP) mega-project. This decision was taken after Aramco sent a letter of resignation from the project.

Saudi Aramco

Pertamina Megaprocessing and Petrochemicals Director Ignatius Tallulembang said Saudi Aramco had resigned from the project after an agreement to review the cooperation ended in April 2020.

Nicke Widyawati

Ignatius conveyed, Aramco through his leadership sent a Letter to Pertamina's Managing Director Nicke Widyawati who informed Pertamina to proceed with the project without the oil company from Saudi Arabia. This is because Aramco is still focused on other things.

"They asked Pertamina to continue, meaning Aramco could not join the Cilacap Refinery construction. So, for the Cilacap Refinery no longer plans to work with Aramco," Ignatius said in a virtual conference.

Ignatius explained, Pertamina also continued to develop the Cilacap Refinery development project as well as looking for new partners to develop the project.

"Pertamina is in the process of finding a new partner, the land has been dealt while looking for opportunities that exist," Ignatius said.

Pertamina-Aramco Split alias Ambyar

In addition, after the withdrawal of Saudi Aramco there were plans to accelerate building a bio refinery or green refinery in the Cilacap Refinery. Ignatius said, the possibility for a bio refinery could be built faster and could operate in 2022 for a small scale.

Through the Cilacap Refinery development project, the original refinery capacity of 348 thousand barrels will increase to 370 thousand barrels per day (BPD). In addition, there will also be an increase in gasoline (gasoline) production from 59 thousand BPD to 138 thousand BPD and diesel production from 82 thousand BPD to 137 thousand BPD. Officially parting with Aramco, Ignatius said, Pertamina is now looking for new partners while developing the Cilacap Refinery independently.

"Pertamina is currently in the process of finding a new partner while looking for opportunities that we can build first. Then, prepare a business scheme by learning from the case of the Saudi Aramco partnership or other further cooperation," he said.

Overseas Oil and Gas LLC (OOG)

Pertamina had also previously been left by a partner in building a refinery. The State-Owned Enterprises (BUMN) in the oil and gas sector were left by Overseas Oil and Gas LLC (OOG), an oil and gas company originating from the state of Oman in the construction of the Bontang Refinery. 

    Without OOG, Pertamina has been forced to delay the construction of the Bontang Refinery. Ignatius explained, Pertamina would focus more on the construction or development of existing refineries as well as work on projects that had already prepared physical activities.

The previous Bontang refinery was part of Pertamina's six megaprojects consisting of four existing refinery developments, namely RDMP and two new refineries, Tuban and Bontang Grass Root Refinery (GRR). Ignatius emphasized that, despite being expensive, the construction of Pertamina's refineries had a multiplier effect on employment and national economic development.

RDMP and GRR also provide opportunities to improve the quality of fuel products (BBM) that are more environmentally friendly in accordance with international regulations and standards so that in the future a healthier Indonesian ecosystem will be realized.

Of the six refinery projects that were previously expected to be completed by Pertamina in 2022, only two refinery projects will be completed. First, Balongan Refinery in Indramayu, West Java, the first and second phases. Second, the Bio-Refinery in the Cilacap refinery in Central Java. He explained, the two projects to date have shown enormous progress.

Nicke Widyawati

Pertamina's President Director Nicke Widyawati said the schedule for the Cilacap Refinery development project which is a national strategic program or PSN will be reviewed and reviewed by Pertamina. 

Erick Tohir

   Previously, SOE Minister Erick Tohir warned that Aramco's negotiations with Pertamina regarding the valuation of the Cilacap Refinery should not be detrimental to the state. He said, bargaining is a natural thing, but don't let the Aramco and Pertamina negotiations harm the country.

Republika, Page-4, Saturay, June 6, 2020

Siemens Supplies Equipment and Generators for Balikpapan Refineries

Siemens Gas and Power were chosen to supply various compression equipment and power plants for the Balikpapan refinery located in East Kalimantan which is operated by PT Pertamina (Persero).

Siemens Gas and Power

"Siemens Gas and Power is proud to partner with Pertamina on this project," said Matthew China Executive Vice President of New Equipment Solutions for Siemens Energy Oil & Gas Division.

According to him, the good performance of his compressor fleet across the region and strong domestic service capability were the main factors of this strategic victory.

SGT-800 gas turbine

"These two factors, coupled with the performance, efficiency, and reliability of the SGT-800 gas turbine, allow for cost savings in the expansion of the Balikpapan refinery and also contribute to the success of Pertamina's RDMP, this certainly plays an important role in increasing Indonesia's energy security," he explained.

Siemens equipment will be installed as part of the Refinery Development Master Project (RDMP) program. The RDMP development involves the construction of a residual fluid catalytic cracker (RFCC) unit designed with a capacity of 90,000 barrels per day (BPSD), LPG sulfur removal unit (SRU), propylene recovery unit (PRU), and middle distillate hydrotreater 80,000 BPSD. Siemens Gas and Power will supply 17 reciprocating compressors, along with a single step hot gas expander.

Meanwhile, the specific compressor models to be supplied include eight HHE-VL compressors, two HHE-FB compressors, four HHE-VG compressors, and three HSE compressors. In addition, Siemens Gas and Power will also supply four SGT-800 industrial gas turbines and five SST-600 steam turbines for Balikpapan power plants.

The hot gas expander will recover waste heat from the RFCC reactor to produce around 20 megawatts (MW) of power, which will be used to drive a central air blower from the plant, along with a single stream turbine.

This unique arrangement will reduce overall steam consumption and result in significant operational cost savings for Pertamina. HHE piston compressors will be used in various refinery processing units which can help ensure stable operation of the plant. 

This compressor has a quality steel frame, so it can reduce vibrations transmitted to the connected pipes and provide maximum stability using internal ribbed walls and integral cross-member bearing saddle which is located between each crank throw.

Investor Daily, Page-10, Wednesday, June 3, 2020

The Government Must Tidy Up to Improve the Investment Climate

The government must fix the management of national upstream oil and gas if it wants to increase oil and gas investment after the Covid-19 pandemic. The reason is that although oil prices have begun to rise after OPEC + cuts oil production, oil and gas companies will be more selective in choosing the locations where they invest.

Energy observer from Trisakti University, Pri Agung Rakhmanto said, the current oil price trend has not been able to stimulate national upstream oil and gas investment. This condition is likely to last until next year. To increase national upstream oil and gas investment, the government is judged to need to improve the competitiveness of the upstream oil and gas business.

"How to be able to attract large scale investment, because competition in the global market to attract investment will be very tight," he said.

The improvement needed is that the government solve the problems that have been around. Some of these include completing the revision of the Oil and Gas Law, ease of operation, and improving the quality of the work areas being auctioned and including the quality of the data. Current conditions make solving these problems even more important for national upstream oil and gas investment.

The same was expressed by the Former OPEC Governor for Indonesia Widhyawan Prawiraatmadja. According to him, oil and gas companies will not be aggressive in investing if crude oil prices have not exceeded the limit above US $ 50 per barrel. However, projects that have been committed by the company will continue, such as the development of the East Sepinggan Block which is postponed to next year.

"But for something new, especially exploration, will be delayed for a very long time until the price returns to a very good level in a sustained time," he explained.

In this condition, he advised the government to provide incentives for the upstream oil and gas sector and gas infrastructure. According to him, the incentives in the gas infrastructure sector will provide consumers access to enjoy liquefied natural gas / LNG whose prices are down.

"Instead of LNG we are exported at low prices, it is better to be used domestically so that it helps the industrial sector. LNG is currently cheaper than gas pipelines. The key is the existence of gas infrastructure, specifically for LNG regasification, "Widhyawan said.

While Former Deputy Minister of Energy and Mineral Resources (ESDM) Rudi Rubiandini suggested the government to change the way of managing national upstream oil and gas so that oil and gas investment is attractive again. One of them is by not giving up the management of all completed oil and gas blocks to PT Pertamina (Persero).

Chevron

Granting management rights to Pertamina must be accompanied by an evaluation related to block oil and gas production. According to him, maintaining world-class oil and gas companies such as Chevron and Conoco-Philips is a way to maintain current oil and gas production so as not to decrease significantly. Furthermore, if these companies do not leave, the government can offer a new scheme that encourages exploration activities.

Conoco-Philips

"Then the company can be asked to explore with a scheme that makes them not afraid as before after there will be a discovery of new reserves. So that there is hope for the future, "explained Rudi.

Previously, he said oil and gas companies were reluctant to explore because of concerns that management rights would not be continued.

Fluctuating Potential

Related to the movement of world crude oil prices, Widhyawan revealed, it had started to move up. This is because OPEC + and non-OPEC + countries cut their oil production very drastically. In addition to the agreement between OPEC + countries, this production reduction is also assessed because some fields are not economical to produce, where most of the production costs are higher than prices.

This is supported by the easing of mobility restrictions (lockdown) which increases oil demand. For example, in the United States, sales of gasoline and aviation fuel have risen again after briefly reaching their lowest levels as people move. Oil prices will improve in line with increased demand at the time of reduced production.

"In my opinion, this will continue until the end of the year and beyond unless there is a phase two pandemic that makes some countries forced

restriction, "explained Widhyawan.

Pri Agung also expressed the same thing. According to him, easing lockdown, reducing oil production by OPEC +, and cutting shale oil production are factors driving improving oil prices.

"With the 'new normal' scenario which is rather optimistic, oil prices will be the US $ 30-40 per barrel or more. This is more likely to happen, "he said.

Rudi also predicts that oil prices will still be in the range of US $ 30-40 per barrel because production cuts by OPEC + have not had a maximum impact. This is because oil stocks have not decreased significantly because oil demand is still low due to Covid-19.

"Maybe the end of the year or early next year will be able to reach above the US $ 40 per barrel like a number that makes producers start producing," he said.

This condition, according to Rudi, will still be very difficult for the national upstream oil and gas industry. He explained that for oil and gas companies that have managed oil and gas blocks in Indonesia, oil prices of US $ 30 per barrel can only make the company alive.

Investor Daily, Page-10, Tuesday, June 2, 2020