Strong Momentum to Stimulate Investment

    The warming of world oil prices in recent weeks is believed to be able to increase the enthusiasm of the oil and gas industry in the country, which had dimmed due to the Covid-19 pandemic.

Blogger Agus Purnomo in SKK Migas

    Head of Program and Communication Division of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Susana Kurniasih said the increase in oil prices would improve the domestic investment climate.

"SKK Migas continues to coordinate with KKKS to support investment realization," Susana Kurniasih said.

    She continued that the upstream oil and gas industry has a high risk so that every project activity is carried out based on predictions of sufficient oil prices.

    According to her, although oil prices have crawled up until now Indonesia's upstream oil and gas work plan is still running in accordance with the 2021 work program & budget (WP&B).

"If there are KKKS on the way to add investment activities even though they are not in the WP&B that year, SKK Migas will facilitate it," She said.

    Based on the 2021 WP&B, the G&G study is targeted at 116 activities. The 2D seismic survey is targeted to be 4,569 kilometers (km), while the 3D seismic survey is targeted to be carried out along 1,549 km.

    Meanwhile, exploration well drilling is targeted at 48 wells, and development well drilling is targeted at 616 wells. Workover activities throughout this year will be carried out as many as 615 wells and followed by well service activities as many as 26,431 activities.

    Susana said that until May 2021, domestic upstream oil and gas investment is still running according to the target and there has been no increase.

"The realization is at US$3.11 billion, still on the track," She explained.

NOT SIGNIFICANT

    Meanwhile, the founder of the Reforminer Institute, Pri Agung Rakhmanto, said that basically, the scale for the amount of investment from upstream oil and gas actors in the country is limited, namely that the majority of the investment disbursed is only about maintaining existing production.

    The unfriendly upstream oil and gas investment climate in Indonesia has made investors reluctant to disburse their funds to start new upstream oil and gas projects in Indonesia.

"The investment surge will only exist if for example there is a large-scale exploration or a large-scale project. If there is nothing new and the scale is not large, it is only about maintaining the lifting level, so it will dwell on the current figures," he told Business.

    The Executive Director of Energy Watch Mamit assessed that investors are still waiting for developments from the movement of world oil prices to a stable position. According to him, investors still believe that the increase in oil prices is temporary.

    Global economic growth with the current vaccination program is still not optimal. A large number of second and third waves of Covid-19 in several countries with high energy consumption is one of the causes.

"In addition, national economic conditions have not yet grown and there are still domestic restrictions that affect investors more or less. The licensing process, procurement of goods, transportation is still not optimal because this pandemic affects activities in our upstream oil and gas sector," he explained.

BP Indonesia

    Meanwhile, the government's efforts to boost oil and gas investment are actually starting to bear fruit. One of them is from BP Indonesia which increased its investment value by US$4 billion to increase Tangguh reserves in Papua.

    Head of SKK Migas Dwi Soetjipto said BP management said it would increase investment in Indonesia through development in the Ubadari Field and carbon capture, utilization, and storage (CCUS).

"We welcome it because it means that the efforts made by SKK Migas and the government to increase investment are paying off," he explained.

    Dwi hopes that BP's steps to increase this investment will soon be followed by other contractors, especially since world oil prices will continue to improve.

"The situation of world oil prices recovering faster, even exceeding the average world oil price in 2019, is expected to encourage KKKS to increase exploration activities outside the program agreed in the 2021 work program and budget," he said.

Bisnis Indonesia, Page-4, Wednesday, May 19, 2021

Transfer to Manage Block Rokan Still Rolling

Three months before the end of the Production Sharing Contract / PSC of PT Chevron Pacific Indonesia (CPI) in the Rokan Block, the process of transferring the management of this block to PT Pertamina (Persero) is still ongoing. Chevron stated that the transfer of Kelola shows significant progress in maintaining the continuity of operations and production of the Rokan Block after 9 August.

Chevron Pacific Indonesia (CPI)

Managing Director of Chevron Indo Asia Business Unit and President Director of CPI, Albert Simanjuntak, said that his party continues to work so that the termination and transition process can be reliable and smooth. This is because the Rokan Block is a strategic asset that is important for state and regional revenues, the community's economy, and national energy security.

The main aspects of the termination process are the termination checklist according to government regulations, asset reporting, and project report closure. As for the transition process, its main aspects include drilling programs, information technology, data migration, management of goods and services contracts, operational procedures and work permits, human resources (HR), and others.

"Progress from these main aspects is very significant and is expected to be complete before the transfer of management later," said Albert.

For the termination process, Chevron has completed the PSC provisional checklist termination document on February 25, 2021. Then the asset reporting has reached 81%, where about 109 thousand assets have been physically inspected and reported. Meanwhile, the closure of project reports reached 70% or around 2940 reports that have been completed.

As part of monitoring, the process of verification and validation (V&V) of exploration and exploitation data of the Rokan Block is currently underway by the Center for Data and Information Technology (Pusdatin) of the Ministry of Energy and Mineral Resources and SKK Migas. 

Blogger Agus Purnomo in SKK Migas

    The V&V process was carried out on approximately one million items of printed documents, magnetic and optical media, and rock samples. The process is expected to be completed this May. CPI also seeks to ensure the readiness of its employees.

"Blok Rokan's performance is solid as long as it is due to 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.

Chevron has submitted all personnel and organizational data to SKK Migas. With the transfer of management of the Rokan Block, almost all employees of PT CPI will switch their employment status to the new operator. Parallel Well Drilling, the drilling program in the Rokan Block is ongoing to maintain production levels. Since its inception in late December 2020, to date, Chevron has successfully drilled 55 wells, including 11 conversion wells, by operating six drilling rigs and one conversion rig.

the Rokan Block by Chevron

The procurement process for additional rigs is ongoing to meet the target of drilling 192 wells in the Rokan Block by CPI and PT Pertamina Hulu Rokan (PHR) this year.

"We continue to coordinate intensively with SKK Migas and PT Pertamina Hulu Rokan (PHR so that the drilling program can proceed as expected. The collaboration is very solid because all parties share the same passion and commitment, ”said Albert.

The Rokan Block is one of the largest oil and gas blocks in Indonesia. However, the production of this oil and gas block continues to decline over time. Referring to SKK Migas data, in 2011, the Rokan Block still produced oil at around 356.98 thousand BPD or contributed 39.56% of the total national oil production at that time at 902.35 BPD. 

    However, referring to SKK Migas data, last year, oil lifting in this block was only 174,424 BPD or 24.62% of the total national oil lifting of 708,488 BPD. In 2021, the Rokan Block is targeted to produce oil of 165,002 BPD.

Investor Daily, Page-10, Tuesday, May 18, 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

Production Efforts from Old Wells Need Innovation

 

    PT Pertamina Hulu Indonesia said it needed innovation from oil and gas companies to increase the production of old wells.

    Pertamina Hulu Indonesia (PHI) President Director Chalid Said Salim said the company is currently trying to innovate in drilling activities, especially for development wells in regional 3 Kalimantan work areas.

"In 2021, PHI plans to drill five exploration wells and more than 80 development wells," he said.

    Meanwhile, PHI and its subsidiaries, namely PT Pertamina Hulu Mahakam, PT Pertamina Hulu Sanga Sanga, PT Pertamina Hulu East Kalimantan, PT Pertamina Hulu Attaka, and PT Pertamina Hulu West Ganal operate the tens of decades-old oil and gas production and operation facilities and fields. years so it requires technological innovation to maintain operating performance and the economy of assets.

    During the first quarter of 2021, PHI succeeded in exceeding the gas production target by the realization of 688.8 million standard cubic feet per day (MMscfd) of the target of the Company Budget Work Plan (RKAP) of 649.2 MMscfd or reaching 106.1%. Positive results were also obtained from oil production which reached 49 barrels per day (BPD) or 100.4% of the target.

    He continued that currently exploration well drilling is being carried out in the Mahakam working area for the TDE C-1X well, which is one of five exploration wells in PHI's definite commitment.

"The TDE C-1X well is the first area where we hope to find economical reserves to extend the production life of the Mahakam Work Area," he said.

Agus Amperianto

    Zone 8 General Manager Agus Amperianto explained the steps taken by PT Pertamina Hulu Mahakam (PHM) in utilizing technological innovations, including in drilling activities in the Mahakam Work Area.

The Mahakam Block

    PHM develops innovations in drilling techniques at the Mahakam CA without using a rig (rigless operation) through the use of the hydraulic workover unit (HWU) Drilling EHR-12 for drilling development wells.

    Agus added that the use of HWU by PHM has proven successful in supporting drilling activities at a lower cost while still prioritizing operational and production safety so that the company continues to encourage the use of this HWU in all regional work areas 3.

Blogger Agus Purnomo in SKK Migas

    Based on data from SKK Migas up to March 31, 2021, the realization of PHM gas production succeeded in exceeding the target with the realization of 535 MMscfd of the WP&B target of 435 MMscfd or reaching 122.9%. For oil production in the first quarter of 2021, PHM also succeeded in exceeding the target with the realization of 130.3% or the equivalent of 28,317 BPD.

    Upstream Subholding Corporate Secretary Whisnu Bahriansyah added that his party would support business units in the upstream oil and gas sector to contribute well to the achievement of national production.

"Upstream sub-holding will continue to support the positive performance of all upstream sub-holding subsidiaries and affiliates to support the country's energy sovereignty.

Bisnis Indonesia, Page-4, Tuesday, May 4, 2021.

Uncertainty Still Looming

 

    High uncertainty still overshadows many upstream oil and gas projects which are targeted to operate this year. Apart from the prolonged impact of the pandemic, the fluctuating factor in world oil prices also makes the prospect always combined with risk.

Blogger Agus Purnomo in SKK Migas

    Based on the records of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), this year it is targeted that as many as 12 projects will be on stream with a total project value of US $ 1.62 billion.

    During the first quarter of 2021, there were 4 onstream projects with a total investment of US $ 111 million, increasing oil and gas production by 5,850 barrels of oil per day (BOPD) and 69.5 million standard cubic feet per day (MMscfd).

PHE ONWJ

    These projects include Gas Supply to RU-V Pertamina Hulu Mahakam, Belato Field by Seleraya Merangin Dua, and the KLD PHE ONWJ project, West Pangkah Saka Indonesia Pangkah.

    Executive Director of the National Oil and Gas Companies Association (Aspermigas) Moshe Rizal is optimistic that the cooperation contract contractors (KKKS) can be more active this year and increase their investment to catch up with last year's lagging performance.

    KKKS will focus on commercially faster projects so that the possibility of project delays this year can be minimized. In the latest development, the Merakes field in the East Sepinggan Working Area has been included in the onstream project after being delayed last year. National gas production is projected to increase by 368 MMscfd.

    It is admitted that realizing the project with a total investment of US $ 1.3 billion located in the Makassar Strait requires extra efforts due to the impact of the Covid-19 pandemic that has emerged since early 2020.

"This project was initially targeted to get onstream faster in the third quarter of 2020. It turns out that we have to shift slightly from the onstream plan that is in the POD approval to the first quarter of 2021, "said the head of SKK Migas Dwi Soetjipto.

Eni

    The important thing from the development of Merakes Field is the ability to synergize to improve the economy in the field. The proximity of the Merakes field discovery to the Jangkrik Lapanga Floating Production Unit (FPU) allows Eni to maximize synergies with the closest existing infrastructure to improve the economics of the Merakes Field. You do this by using a shared facility sharing scheme.

the Merakes field by ENI

    The Merakes Field development project is a deep-sea project where the depth is about 1,500 meters below sea level. This project has 5 production wells with a total production capacity of 450 MMSCFD or the equivalent of 85,000 barrels of oil equivalent per day (BOEPD).

    The production contribution from the Merakes field will increase the gas supply for East Kalimantan Province. Most of it will be prioritized for domestic consumers, including the fertilizer and electricity industry in East Kalimantan, and processed at the Bontang Refinery into LNG.

"We hope that with the certainty of gas supply for the industry, it will provide a bigger multiplier effect for the national economy," Dwi said.

    According to him, this year there are two national strategic projects targeted onstream, namely Jambaran Tiung Biru with a total investment of US $ 1.53 billion. If it operates commercially, it is projected to increase national gas production by 190 MMscfd.

    Tangguh Train-3 Papua is also scheduled to go on stream in the fourth quarter of 2021 with estimated additional gas production of 700 MMscfd and a concentrate of 3,000 barrels of condensate per day (BCPD).

    This US $ 8.9 billion projects was delayed from the previous target in the third quarter of 2021 to the fourth quarter of 2021. With the support of these projects, it is hoped that investment in the upstream oil and gas sector this year can be better than last year's US $ 10.21 billion from the 2020 target of US $ 12.1 billion.

"We hope that the investment in the upstream oil and gas sector at the end of the year can be greater than 2020. The amount of realization in the first quarter of 2021 is the US $ 2.4 billion, then for revenue in the first quarter of 2021 it will reach US $ 6.67 billion."

    Energy Watch Executive Director Mamit Setiawan said these expectations can be achieved as long as a number of important conditions are met. For example, related to the development of world oil prices, ease of carrying out work during a pandemic, full support from stakeholders, and solid cooperation at the regional level.

Bisnis Indonesia, Page-2, Friday, April 30, 2021.

Caring for Production Increase expectations

 

    The national fuel consumption which is projected to continue to increase makes the target of oil production of 1 million barrels per day and gas of 12,000 MMscfd in 2030 to be crucial at a time when Indonesia's efforts to build energy independence.

    Meanwhile, Indonesia is still the country with the largest oil imports in Southeast Asia due to the increasing domestic consumption of oil and gas without a significant increase in production.

    In the last 2 decades, the discovery of new oil reserves has been classified as minimal and Indonesia still relies on old wells that have not been explored. As a result, the government must import oil and gas to meet domestic energy needs, which often creates a trade balance deficit.

    In the next 10 years, petroleum consumption in Indonesia is projected at 2.27 million barrels per day (BPD) and natural gas consumption of around 11,728 MMscfd. This number has almost doubled compared to last year's consumption of around 1.66 million BPD of oil and 6,557 MMscfd of gas.

    On the other hand, the government's efforts to increase oil production to 1 million BPD and gas to 12,000 MMscfd are still fraught with a number of challenges. One of them is the Covid-19 pandemic which has had a negative impact on the upstream oil and gas industry.

Blogger Agus Purnomo in SKK Migas

    Secretary of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Taslim Z. Yunus said Indonesia's upstream oil and gas industry was influenced by global conditions caused by the level of control of the Covid-19 pandemic, fluctuations in world oil prices, and global investment trends.

    According to him, a tough challenge for the upstream oil and gas industry is the massive impact of Covid-19 which has caused oil prices to fall. As a result, production has also decreased, because oil and gas companies tend to reduce their investment.

    Last year, a number of international oil and gas companies that cut their investment were ExxonMobil by 30%, Shell by 20%, Chevron 20%, BP 25%, and Eni 255.

"What they need is to compete with other countries from the IRR, then the future trend is to look at environmentally friendly energy because from a social point of view it will be easier," he said.

    Meanwhile, SKK Migas has prepared four strategies to increase national oil and gas production as well as towards the 2030 production target, namely by optimizing production in existing fields, transforming resources into production, accelerating chemical Enhanced Oil Recovery (EOR), and exploring major discoveries.

    The long-term strategy will go through two stages to curb the rate of decline in production and increase production.

"The first and second strategies are to hold down the rate of production, while the increase in production will result from the EOR and exploration strategies," he explained.

    Head of SKK Migas Dwi Soetjipto added that investment needs will continue to increase for the next 10 years in order to pursue the oil production target of 1 million BPD and gas of 12,000 MMscfd. The investment is set at the US $ 187 billion.

    Dwi said that besides being attractive to investors, the target could provide a multiplier effect in the form of the gross revenue of US $ 371 billion with state revenues of US $ 131 billion in 2030. In addition, with money circulating from upstream oil and gas projects and open job opportunities, it will have an impact. both for the national and regional economies.

    Nevertheless, there are several challenges that need to be resolved domestically, namely the complexity of licensing, overlapping regulations between the central and regional governments, an unattractive fiscal regime, data unavailability, constraints in the area of ​​operation, land acquisition constraints, the longer oil and gas monetization process. and fear of making decisions, in this case, the criminalization of policies.

    Meanwhile, Ronald Gunawan, President Director of PT Medco E&P Indonesia, said 2020 was a difficult year for the upstream oil and gas industry. The Covid-19 pandemic has suppressed the performance of cooperation contract contractors (KKKS).

    According to him, the world oil price dropped drastically in the last year and followed by low natural gas prices made the upstream oil and gas sector languish. However, with efforts escorted by the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), operational activities can continue in the midst of a pandemic.

"SKK Migas support is very good. Hence, the operations of the KKKS are a little disrupted but not significant, ”he said.

Ronald said the vision to pursue the oil production target of 1 million BPD and 12,000 MMscfd of gas by 2030 has become a joint commitment of the government, SKK Migas, and KKKS.

    Meanwhile, since 2015 Medco has continued to increase its oil and gas production levels from the range of 56,000 barrels of oil equivalent per day (Mboepd) to reach the level of 100,000 Mboepd in 2020.

    According to him, the Covid-19 pandemic provides new lessons for running operations more efficiently. With a 20% reduction in capital expenditure or capital expenditure, Medco is still able to record an increase in production amid the pandemic.

INCENTIVE

    An energy observer who once served as Governor of Indonesia for OPEC, Widhyawan Prawiraatmadja, said that there needs to be an incentive provided by the government to be able to pursue the target of increasing oil and gas production.

    He said that it is possible to increase oil and gas production again in Indonesia. He gave an example that other countries, such as the United States and Mexico, had successfully implemented reliable technology, improved fiscal policy, and improved the business climate in an integrated manner.

"We have to do something drastic, the fiscal term must be the same as in other places. "The higher the spend, the higher the chances of getting the giant, this has been proven in Mexico," he said.

    Meanwhile, a Member of the National Energy Council, Satya Widya Yudha, said that in the context of energy security, the government needs to pay attention to affordability.

    Therefore, fossil energy will still be very dominant in the future, but still paying attention to environmental factors that will be supported by technology.

"So if our renewable energy is still less affordable, as a whole people will go to fossils, the world will go to fossils," he said.

Bisnis Indonesia, Page-4, Thursday, April 29, 2021.

Pertamina Encouraged to Accelerate the Realization of Upstream Oil and Gas Investment

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) encourages Pertamina Group to accelerate the approval of upstream oil and gas investment. This acceleration is needed to meet the national oil lifting target this year, which was set at 705 thousand barrels per day (BPD).

Blogger Agus Purnomo in SKK Migas

    Head of SKK Migas Dwi Soetjipto said the realization of oil production by the end of March was recorded at 679.5 thousand BPD, so there is still a gap of 25.5 thousand BPD with a target of 705 thousand BPD. 

    This difference is due to the fact that the work programs of several cooperation contract contractors (KKKS) have not been realized, some of which are in the KKKS under the Pertamina Group. According to him, the difference in production from the Pertamina Group KKKS is around 10 thousand BPD.

"We are working hard to accelerate the work plan, especially in the second and third quarters. There is already a commitment from KKKS, including Pertamina, to accelerate implementation from the fourth quarter to the third quarter, so that it doesn't accumulate at the end of the year and the impact on production can be felt more quickly, "said Dwi.

    He said, the existence of organizational changes within the Pertamina Group through the formation of Upstream Subholding, had an impact on the implementation of the KKKS upstream work plan under the Pertamina Group. Primarily, related to the Final Investment Decision (FID) approval for the upstream work program.

    His party has discussed the delay in implementing this work plan with the management of PT Pertamina (Persero) as the Oil and Gas Holding and PT Pertamina Hulu Energi (PHE) as the Upstream Subholding. Pertamina has committed to be able to immediately provide investment approval and immediately resolve problems related to organizational changes.

"It has been said that starting this month there should be no more issues waiting for FID and this has been implemented. Pertamina has raised the investment limit that the subsidiary can make, ”said Dwi.

    This change will make the implementation of activities with a budget that is not too big to be smoother, including for drilling wells. PT Pertamina EP Communication Relations & CID Manager Hari Setyono said that his party remains committed to meeting national energy needs and supporting the achievement of targets set by the government. For this reason, Pertamina EP will increase the number of wells drilling this year to 131 wells.

"This amount represents the largest number of drilling in the history of Pertamina EP's operational activities," he said.

    Referring to SKK Migas data, there are three KKKS under the Pertamina Group whose oil production is still below the APBN target. In detail, as of last March, Pertamina EP oil production was recorded at 73,503 BPD or 86.5% of the target of 85 thousand BPD, PT Pertamina Hulu Energi OSES 24,030 thousand or 89% of the target of 27 thousand BPD, and PT Pertamina Hulu East Kalimantan 8,779 or 83. , 6% of the target of 10,500 BPD.

Pending Drilling

    According to Dwi, delays in the implementation of work programs also occurred in other KKKS, which in turn had an impact on the low realization of oil and gas lifting. In the first quarter of 2021, the realization of development wells still reached 76 wells, or 13% of the target of 616 wells. Then the realization of workover was only 143 wells or 23% of the target of 615 wells and well maintenance only 5,531 activities or 21% of the target of 26,431 activities.

    For exploration activities, 6 wells of the target of 48 wells were still drilled, 2D seismic survey of 1,349 kilometers (km) of the target of 4,569 km, 3D seismic of 263 square kilometers (km2) of the target of 1,549 km2, and G&G study of 62 activities from the target 116 activities.

"The development well is indeed at the beginning of the year for investment permits or FID and the procurement process has become late because it has only started in the current year in the future it will be repaired, "said Dwi.

    Another reason is that the production performance of several fields did not match forecasts, such as an increase in water content in the Banyu Urip and Sukowati Fields. Then there is the issue of facility integrity in the Offshore South East Sumatra (OSES) Block, X-Ray Field, and a leak in the North West Java Offshore Block.

    Finally, unplanned shutdowns at the Tangguh Papua Project, Suban Field, and the Jabung Block. However, he said that the acceleration of the implementation of the Pertamina Group and other KKKS work programs would help in pursuing the lifting target. 

    Moreover, the actual lifting has already exceeded 90%, namely oil lifting of 676.2 thousand barrels per day or 95.9% of the APBN target of 705 thousand BPD and gas of 5,539 million standard cubic feet per day / MMscfd or 98.3% of the target of 5,638 MMscfd.

"We will help with various kinds including FID approval, land acquisition, and environmental permits. We are working hard to be able to accelerate it, "said Dwi.

    The realization of oil and gas investment in the first quarter yesterday was not too high, namely US $ 2.4 billion or 19.4 percent of the target of US $ 12.38 billion.

"Efforts to attract investors will continue," he added.

    SKK Migas is working on a number of additional incentives for KKKS so that national oil and gas production can be higher.

Investor Daily, Page-10, Wednesday, April 28, 2021.

Existing Power Supply Continued 3 Years

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

Blogger Agus Purnomo in SKK MIGAS

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

PT Chevron Pacific Indonesia

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

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

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

the Rokan Block

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

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

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

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

The Lifting Target of Petroleum Is More Challenging

 

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

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

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

Blogger Agus Purnomo in SKK Migas

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

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

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

the Cepu Block

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

the Rokan Block Chevron in Riau

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

PT Chevron Pacific Indonesia (PCI)

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

Exploration

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

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

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

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

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

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

Pandemic Effects Of The Upper Oil and Gas Load

 

The national oil and gas industry is not yet optimally producing significant results in the first quarter of 2021. The realization of ready-to-sell production is still below the target.

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 realization of ready-to-sell production or oil and gas lifting during the first quarter of 2021 was 1,665.25 Mboepd or 97.3% of this year's APBN target of 1,711.78 Mboepd.

In detail, the realization of oil lifting in the first quarter of 2021 was recorded at 676,200 barrels per day (BOPD), or only 96% of this year's APBN target of 705,000 BOPD. Likewise, the realization of natural gas lifting in the first quarter of 2021 was 5,539 MMScfd, or 98.2% of the APBN target of 5,638 MMscfd.

“From the oil side, the entry point at the end of 2020 is very low. At that time it was 699 MBOPD and because there was a decrease in investment, the level of production was not appropriate. That is one of the factors affecting the performance that was not achieved in the first quarter of 2021, "he said.

Exxon Mobil Cepu Ltd. (EMCL)

Dwi added that oil and condensate production missed plans in several fields. For example in the Banyu Urip field by Exxon Mobil Cepu Ltd. (EMCL) which experienced an increase in water cut and also in the Sukowati Tuban field in East Java by PT Pertamina EP. Dwi said Exxon Mobil Cepu (EMCL) and Pertamina EP contributed to the shortfall in the national lifting target of 10,000 bopd each.

BP

In addition, there has been a decline in the contribution of drilling several wells, namely Pertamina Hulu East Kalimantan and Minarak Brantas Gas. This condition was exacerbated by the unplanned shutdown in the first quarter of 2021 at Train-1 and Train 2 at BP Berau, CPGL Suban Plant, and at BGP Petrochina Jabung.

Petrochina

"We are trying to calculate, the year-end outlook will not reach 705,000 bopd, but we are trying to make a strategy for no decline in 2021. We can get closer as possible," Dwi said.

Pertamina EP

Meanwhile, the failure to achieve the realization of natural gas lifting was also partly due to the inability to achieve Pertamina EP production. In addition, there are differences in assumptions related to the completion of the Tangguh Train-3 project.

Dwi said that the Tangguh Train-3 project is assumed to be completed at the beginning of this year under these assumptions. But in reality, the project is declared to be shifted until the end of 2021 and there is a possibility that it will be completed next year.

Meanwhile, the organizational reshuffle that has taken place within the PT Pertamina (Persero) group is considered to be one of the causes for the low-performance achievement of this state-owned company in the upstream oil and gas sector. According to Dwi, this is a natural fit when there is an overhaul of the organizational structure. The reason is that the investment has not been able to take place smoothly.

“Subholding is a cause and a process. That usually happens, but Pertamina has carried out harmonization, "he said.

Based on SKK Migas data, in the first quarter of 2021, the Pertamina group cooperation contract contractors (KKKS) that did not meet the APBN oil lifting target included Pertamina EP which only reached 98.8% of the target, Pertamina Hulu Energi Oses 89% of the target, and Pertamina Hulu East Kalimantan 83.6%. Meanwhile, for the realization of natural gas lifting, only Pertamina EP did not reach the target of the Pertamina group with a realization of 99.8% of the target.

Dwi said SKK Migas has communicated directly with both the parent and the upstream sub-holding Pertamina regarding the investment process in the upstream oil and gas sector. SKK Migas has asked the state-owned company to speed up its investment process.

"In the last meeting, it has been announced that starting this month, the issue of waiting for FID is no longer allowed and it has been implemented. Pertamina has determined and raised the investment limit that can be made in the subsidiary, "he explained. Pertamina has stated that it is ready to increase its investment to increase operational performance by up to 20% this year.

Pertamina's Senior Vice President for Corporate Communications & Investor Relations Agus Suprijanto said that to achieve this target, Pertamina has set a Capital Expenditure / Capex budget of US $ 10.7 billion in 2021, a drastic increase from last year's CAPEX realization prognosis of US $ 4.7 billion.

Agus explained that from the total CAPEX, as much as 46% will be allocated for upstream oil and gas activities as an effort to ensure an increase in production and oil and gas reserves. The addition of oil and gas reserves is targeted to reach 696 MMboe or nearly four times the target of adding reserves last year.

Meanwhile, 36% of the CAPEX will be allocated to continue the development of refineries and petrochemicals, while the remaining 18% will be used for other business activities, including continuing the development of new and renewable energy.

"The budget shows Pertamina's high optimism to continue to grow and rise amid the Covid-19 pandemic by continuing the projects or business development that had been going on since the previous year and at the same time creating new initiative programs," said Agus.

OLD FIELD

Reforminer Institute founder Pri Agung Rakhmanto argues that lifting is difficult to reach the target because KKKS still continues to rely on old fields, leading to a downward trend.

According to him, the characteristics of the field in addition to the cost per barrel tend to increase and are difficult to predict technically in terms of production operations.

"This is the main technical reason why lifting often does not reach the target. From year to year, we will always struggle with this problem when talking about lifting achievements with the existing fields, "he said.

In connection with the low production of the Pertamina group, Pri Agung assessed that the main cause was not from overhauling the organizational structure through the formation of sub-holding.

"In my opinion, it has nothing to do with the holding sub-holding issue. Lifting is more on short-term managerial issues and operational technical matters, ”he explained.

Executive Director of the National Oil and Gas Companies Association (Aspermigas) Moshe Rizal said that almost all fields in Indonesia have reached their peak production period. So, it is natural for lifting to fall.

Therefore, it needs interventions such as the development of new fields or exploration. In addition, an enhanced oil recovery (EOR) program can be carried out for fields that have entered the secondary or tertiary production phase.

"The problem is that most fields have not prepared the EOR program from an early age so that the development of the EOR program is very expensive and often no longer goes into the field economy," he said.

He added that the low realization of national lifting was also caused by the attitude of investors who are still waiting for the situation to handle Covid-19. Even though the oil price has been very stable above $ 60 per barrel, the situation is still full of uncertainty.

"Investors will focus their investment in areas with lower risk, for example, fields that are already producing and still reduce exploration first," he explained.

Bisnis Indonesia, Page-4, Tuesday, April 27, 2021