Petronas Interested in Working on the Masela Block

    The Special Task Force for Upstream Oil and Gas Activities (SKK Migas) stated that a Malaysian oil and gas company, Petronas, expressed interest in working on the Masela Block, replacing Shell, which had left the largest gas project in Indonesia.

Petronas

    Petronas is also interested in entering into cooperation with Pertamina in terms of replacing Shell if possible. This is the latest development regarding Shell," said Head of SKK Migas Dwi Soetjipto in a hearing with Commission VII.

The Masela Block

    Apart from Petronas, previously there were two companies that were known to be interested in replacing Shell in acquiring a 35% stake in the Masela Block, namely Pertamina and ExxonMobil. Dwi said Pertamina had opened the Masela Block data room this November. It is hoped that Pertamina can submit a Non-Binding Offer to Shell.

ExxonMobil

    The government is targeting that discussions on the acquisition of Shell's participating interest (PI) in the Masela Block by Pertamina can be completed this year. One of the main conditions for reaching an agreement is the certainty of PI's acquisition value. According to Dwi, Pertamina must find an agreement with Shell to get into the Masela project.

Shell

    According to Dwi, Shell already has a minimum value base that must be prepared by Pertamina. This value is the total funds that have been spent by the company while being Inpex's partner in Masela.

Blogger Agus Purnomo in SKK Migas

"Pertamina is negotiating with Shell. SKK Migas monitors and provides direction so that Shell sells at moderate prices. To keep the project going. We wrote to Shell to support the divestment. Around US$1.4 billion has been spent by Shell," Dwi said.

Inpex Corporation

    Meanwhile, for Pertamina, there is ExxonMobil which was also offered by Inpex to conduct the study. SKK Migas said Dwi hopes that there will be opportunities for cooperation between Pertamina and ExxonMobil to open again, instead of the scent of competition. However, it all comes back to the management of each company whether to continue the collaboration as it has been in the Cepu block.

"If all this time ExxonMobil is also conducting studies, it could be a potential collaboration with Pertamina. But we'll see now that each study has its results, whether we want to continue or not," said Dwi.

IDD Project

    Meanwhile, Dwi also stated that the Indonesia Deepwater Development (IDD) project is expected to start running in early 2023, due to the certainty that the replacement operator for PT Chevron Pacific Indonesia will be completed by the end of this year.

Chevron

“Chevron has decided to leave the IDD project. Now there is a potential replacement. IDD could run next year," said Dwi.

ENI

    According to information, an Italian oil and gas company, ENI, is rumored to be controlling 62% of Chevron Pacific Indonesia's (CPI) participating interest in the Indonesia Deepwater Development (IDD) Gas Project. The IDD project has the potential to produce up to 844 million standard cubic feet of gas per day (MMscfd) and 27,000 barrels of oil per day (BOPD). The plan is for the project to be targeted onstream in the fourth quarter of 2027.

Investor Daily, Page-4, Thursday, Nov 17, 2022

Petronas Becomes Pertamina's New Competitor in the Masela Block

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) said that a new competitor in the takeover of Shell Upstream Overseas Ltd.'s 35% stake has decided to leave the Masela Block.

Petronas

    The presence of Petronas has increased the number of potential investors in the Masela Block. Because, previously, Pertamina-INA-Medco and ExxonMobil were reportedly interested in taking over Shell shares. Deputy Head of SKK Migas Fatar Yani Abdurrahman revealed that Petronas has just expressed its interest in replacing Shell in the Masela Block.

the Masela Block

"After someone made an offer, Petronas was interested in joining, but we are currently studying it. We will discuss this," said Fatar.

    Currently, Petronas is only waiting for the government's commitment. However, SKK Migas cannot confirm whether Petronas will enter with partners or alone. What is certain, "Petronas has expressed its interest in investing in this LNG project with a capacity of 9.5 million tons per year," said Fajar.

Blogger Agus Purnomo in SKK Migas

    SKK Migas previously targeted Pertamina to submit an offer to Shell for the acquisition of a 35% stake in the Masela Block this November.

    Until now, the filing of this interest has not been carried out. Pertamina's consortium is currently still being evaluated with various options.

    Potential replacement investors for Shell in the Masela Block must invest around US$ 1.4 billion if they are interested in taking over shell shares. The amount of this investment does not include the funding requirement of US$ 6.3 billion for the first five years of development as capital expenditure.

    In addition, with the addition of the Carbon Capture Utilization & Storage (CCUS) project to the Masela project, there is a potential for additional investment of around US$ 1.2 billion to US$ 1.4 billion.

    Fatar emphasized that learning from Shell's release in the Masela Project, SKK Migas is prepared to strengthen the existing provisions in the future oil and gas block Plan of Development (PoD).

sHell

    Fatar revealed that SKK Migas felt like it had been lied to by Shell leaving the Masela Block. Moreover, "When the POD, we provide incentives, but the conditions are poor. For example, until the commercial production is not allowed to leave the Masela Block," said Fatar.

    The Masela Block project is the first very large-scale project in Indonesia. This also makes the government happy. But unfortunately in the terms and conditions of the contract, there is no protection for the project so that investors don't just run away.

    So, in the future, SKK Migas is targeting regulations to provide protection so that investors do not leave the project until the commercial production stage. This provision applies to projects that receive incentives. As a result of Shell's escape, the construction and development of the Masela Block was delayed. Moreover, the release of management shares or Shell's participating interest requires approximately 18 months for a 35% stake in the Masela Block.

Kontan, Page-12, Wednesday, Nov 16, 2022

FRESH WIND FROM PETRONAS AND BP

 

    The national upstream oil and gas industry gets fresh air from the commitments of Petronas and BP in three of the four work areas offered by the government through the Ministry of Energy and Mineral Resources.

BP

    The inclusion of Petronas and BP in the Working Areas (WK) or oil and gas blocks North Ketapang, Agung I, and Agung II is considered as the success of the government is seeking to improve the investment climate in the country.

    Moshe Rizal, Executive Director of the Association of National Oil and Gas Companies (Aspermigas), said Petronas in the North Ketapang WK, and BP in the Agung I and Agung II WKs is a good thing. The reason is that the two companies are large National Oil Company (NOC) and International Oil Company (IOC).

Blogger Agus Purnomo in Petronas PC Ketapang 

"We hope like that, we will see the realization in the next three years," he said.

    Moshe also hopes that the government will continue to support oil and gas companies in realizing their investment in the country, especially when conducting exploration activities.

"The challenges that will be faced are both technical and non-technical, and the exploration stage is always the riskiest period."

    When announcing the winner of the direct bid bidding for the oil and gas Working Area phase II 2021, Director General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM) Tutuka Ariadji said that the terms and conditions offered by the government this time received a good response from the cooperation contract contractors or KKKS.

“We also received input from KKKS that the terms and conditions offered in this auction are very attractive, and their terms are solid. We can see that in Working Area with high risk, the split can be up to 50-50, and if the risk is reduced, the government's share will be bigger," he said.

    He said the government would seek to improve the investment climate in the national upstream oil and gas industry and offer 17 other Working Areas this year.

    To note, the government received a definite investment commitment of US$14.14 million from Petronas, BP, and Mitra Multi Karya in the auction. In addition, there is also a signature bonus of US $ 1.2 million obtained by the State.

Working Area Ketapang Block Petronas 

    In detail, Petronas through PC Ketapang II Ltd. will conduct a G&G study at WK North Ketapang with a budget of US$1 million, 3D seismic covering an area of ​​300 square kilometers worth US$6.39 million, multi-client uplift fee from 3D seismic covering an area of ​​​​262 square kilometers US$750,000, and a signature bonus of US$500,000

    In WK Agung I, BP through BP Exploration Indonesia Limited will conduct a G&G study with a budget of US$500,000, 2D seismic covering an area of ​​2,000 square kilometers worth US$2 million, and a signature bonus of US$100,000. As for WK Agung II, BP through BP West Papua I Limited is ready to conduct a G&G study worth US$500,000, 2D seismic covering an area of ​​2,000 square kilometers with a value of US$1 million, and a signature bonus of US$100,000.

    Then Mitra Multi Karya will do a workover of eight wells with a budget of US$2 million, and a signature bonus of US$500,000.

    Tutuka said that the investment commitments from the three companies were a positive signal for national upstream oil and gas investment in times of challenging global conditions.

Blogger Agus Purnomo in SKK Migas

FULL SUPPORT

    Head of SKK Migas Dwi Soetjipto ensured that his party will provide full support so that the management of the North Ketapang Working Areas (WK) ​​can run smoothly until new reserves are found.

    According to him, the election of Petronas as the manager of North Ketapang shows that Indonesia's upstream oil and gas investment is still attractive to world-class investors.

“Petronas is one of the largest oil and gas companies in the world. With the additional investment in Indonesia, hopefully, this will be able to attract other world-class investors to follow Petronas' footsteps."

    Petronas Executive Vice President and Chief Executive Officer of Upstream Adif Zulkifli said his party was very happy with the results of the auction. Moreover, Working Areas (WK) North Ketapang is located close to where the company discovered oil reserves last year.

"We will continue to strengthen our upstream oil and gas business to provide value and contribute to the development of the energy industry in Indonesia. As a progressive energy and solutions partner, Petronas is committed to providing Indonesia with a safe and reliable energy supply," he said.

    Separately, BP through its official statement stated that Working Areas (WK) Agung I and II are unexplored areas. The two Working Areas (WK) with very significant gas sources are close to the increasing demand for gas.

"The addition of Agung I and Agung II Blocks to our portfolio reflects our ongoing commitment to invest and grow our business in Indonesia," said BP Regional President Asia Pacific Nader Zaki.

Bisnis Indonesia, Page-4, Monday, March 21, 2022

SKK Migas Expects Onstream Schedule to Match POD

    The Abadi gas field project in the Masela Block is delayed in production in 2030. Meanwhile, the Special Task Force for Upstream Oil and Gas Business Activities or SKK Migas still hopes that the onstream schedule will match the development plan.

Inpex Masela Ltd and Shell

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) asked Inpex Masela Ltd and Shell as the operator of the Masela Block to carry out the Masela Block Liquefied Natural Gas (LNG) investment in accordance with the approved Plant of Development (PoD). The Masela Block LNG project is agreed to be completed and start production by the end of 2027.

Blogger Agus Purnomo in SKK Migas

    The Deputy of Operations for the Special Unit for Upstream Oil and Gas Business Activities (SKK Migas), Julius Wiratno stated that his party continues to push for the project to be completed in accordance with the approved PoD. SKK Migas also said that it had not yet received a revision proposal from Inpex.

Inpex

"SKK Migas to this day continues to push for implementation according to the approved PoD, for immediate production as soon as possible. We have not received a revision proposal from Inpex at all and we are still fighting for acceleration efforts," said Julius.

    Julius emphasized that the government through SKK Migas is still encouraging Inpex's investment in Masela, this must be realized immediately. Because some preparatory work has been and is being started, such as the approval of the Environmental and Impact Analysis (AMDAL), metocean surveys, and land acquisition.

Takayuki Ueda

    Previously, Inpex CEO, Takayuki Ueda explained, that Inpex is conducting comprehensive size studies such as the introduction of carbon capture, utilization, and storage facilities, known as CCUS.

the Masela Block LNG

    The CCUS installation is intended to make the Masela Block LNG project more environmentally friendly, but the project could be delayed until 2030.

"SKK Migas has asked Inpex to immediately revise the POD, if that is what is desired, for us the planning team, in particular, can immediately conduct a review and evaluation," explained Julius.

    As is known, currently Inpex Masela Ltd and Shell as the operator of the Masela Block are revising the PoD of the oil and gas working area that is included in the National Strategic Project (PSN). The PoD revision relates to the inclusion of CCUS. This is done so that the assets of the Masela Block in this case the Masela LNG can be said to be competitive because it has green energy requirements.

    The majority of Masela Block's participating shares are 65 percent owned by Inpex Masela. The rest is owned by Shell. But Shell has said it will leave the block. However, the plan failed to materialize because there were no investors who wanted to buy Shell shares.

    In addition to the Masela Block, SKK Migas also hopes that the Indonesia Deepwater Development (IDD) project located in the Kutai Basin, East Kalimantan, can be completed immediately and start production in the fourth quarter of 2025. The IDD project is a development project for five deep-sea gas fields that are carried out in an integrated manner to meet the gas needs of the domestic market and the Bontang LNG Plant. The IDD project has production reaching 844 MMscfd for natural gas and 27,000 barrels of oil per day (BOPD).

the IDD project Chevron

    In the IDD project, Chevron acts as the operator. The company controls 62% of the participating interest or interest (PI). The rest is controlled by ENI with a 20% stake and Sinopec Group 18%. However, the continuation of this mega project is still uncertain. Because, since 2020, Chevron declares to discontinue the IDD project.

ENI

"For this IDD project, the update now is that the operator Chevron Pacific Indonesia (CPI) is still looking for a replacement operator," said Julius.

DIFFICULT MISSION

    On the other hand, the government has targeted oil lifting of 1 million BOPD and gas of 12 BSCFD by 2030. However, this target is impossible to achieve without new large-scale oil and gas projects. Previously, the government through the Directorate General of Oil and Gas together with SKK Migas and cooperation contract contractors [KKKS] had identified the planned production profile of each KKKS and it was known that total oil production would reach 1 million BOPD in 2030.

    The government has also prepared several strategies to increase production, namely routine work programs such as infill drilling/step out in existing fields, and workover/well service. In addition, acceleration of the transformation of resources into production is also carried out, by accelerating new PoDs and pending PODs.

    An energy and oil economist from Trisakti University Pri Agung Rakhmanto said that without a new large-scale oil and gas project the oil lifting target of 1 million bopd would not be possible to achieve.

"To achieve the oil and gas production target of 12 MMscfd and 1 million BOPD, there needs to be a new project on a large scale," said Pri Agung.

    According to him, efforts to increase the production of existing oil and gas fields are not sufficient to achieve the government's ambitious targets.

“If it's EOR, we need EOR on a large-scale oil and gas field. The current EOR has just been done on a small scale. EOR and other efforts can only stop the rate of decline in production in existing fields so that it doesn't decline further," he explained.

    Pri Agung is of the view that this 1 million BOPD is not worthy of being called a target because there is no clarity on the details of the work program. For example, from which field the production target was produced.

    The Executive Director of the Reforminer Institute Komaidi Notonegoro also said the same thing. According to him, without finding large reserves, the target of 1 million BOPD is just wishful thinking.

"To be able to reach 1 million BOPD, it is calculated that additional production from large-scale oil and gas fields or the majority is generated from large-scale investments made by major International Oil Companies [IOCs]," said Komaidi.

Jambaran Tiung Biru in Central Java

    Currently, Indonesia has four giant oil and gas projects, namely, Jambaran Tiung Biru in Central Java, the Abadi Field in the Masela Block in the Arafura Sea, IDD in the Kutai Basin in East Kalimantan, and Tangguh Train 3 in Papua. Unfortunately, these projects are expected to be completed longer than the target set. The reason is, recently, the foreign oil and gas giant that manages this mega project has stated that it will leave Indonesia.

Bisnis Indonesia, Page-4, Wednesday, February 23, 2022

SKK Migas - KUFPEC Discovers New Oil and Gas Reserves in Natuna

 

    SKK Migas KUFPEC monitoringoil.com - Kuwaiti oil exploration company K.S.C.C. (KUFPEC) through a company operating in Indonesia, the Cooperation Contract Contractor (KKKS) KUFPEC Indonesia (Anambas) BV (KUFFPEC Indonesia) which has a contract with the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), has discovered oil and gas reserves new. 

Blogger Agus Purnomo in SKK Migas

    This is based on the results of drill stem tests conducted at the Anambas-2X exploration well in the Anambas Block, Natuna Sea, off the coast of Indonesia.

    The block is operated by KUFPEC Indonesia (Anambas) B.V. (KUFPEC Indonesia), with KUFPEC Indonesia holding all 100% of participating rights. As part of the drilling program, KUFPEC Indonesia conducted five drill stem tests in Gabus Bawah, Intra Keras, and Arang Formation. 

KUFPEC

    This test resulted in a stable combined flow rate of 40 million cubic feet of natural gas (MMscfd) and 1,240 stb/d of condensate. The results of the well-deepening program also reflect the positive side of the well's original purpose and identify potential opportunities for further exploration in the deeper formations.

    This exciting discovery marks the first operational offshore exploration discovery for KUFPEC and demonstrates KUFPEC's growth and potential as an operator of offshore oil and gas projects in accordance with the KUFPEC 2040 strategy. 

    The well was drilled at a depth of 288 feet, using a jack-up rig to reach a total depth of 10,509 feet. SKK Migas Deputy for Planning Benny Lubiantara expressed his appreciation for the discovery of the Anambas-2X exploration drilling well operated by KUFFEC Indonesia.

“This discovery shows that the oil and gas potential in Indonesia is still promising. The discovery of oil and gas reserves by KUFFEC Indonesia is the second discovery of drilling results in 2022, after previously in January 2022, new oil and gas reserves were also found in the Mahakam block by other KKKS," said Benny in a release in Jakarta.

“The discovery of exploration wells by foreign companies from Kuwait shows that Indonesia's oil and gas potential is still attractive in the eyes of international investors. We hope that this discovery will encourage international oil companies (IOCs) to invest in Indonesia,” said Benny

Investor Daily, Page-9, Saturday, Feb 12, 2022

Pertamina Hulu East Kalimantan Gets Incentives from the Government

    PT Pertamina Hulu Kalimantan Timur (PHKT), a Cooperation Contract Contractor under the supervision of SKK Migas as well as part of the Pertamina Subholding Upstream Regional Kalimantan Zone 10, officially received fiscal incentive approval from the Government of Indonesia, through the Ministry of Energy and Mineral Resources (ESDM) on January 12, 2022.

Blogger Agus Purnomo in SKK Migas

    The provision of incentives to PHKT is part of the Government's strategy in order to achieve the national oil and gas production target of 1 million barrels of oil per day and 12 billion standard cubic feet of gas per day by 2030. 

    This incentive approval is given to the incentive proposal initiated by PHKT since 2020 which refers to the Minister of Energy and Mineral Resources No. 52 of 2017 concerning Gross Split Production Sharing Contracts taking into account the economics of the field in accordance with applicable regulations.

    Based on the approval letter from the Minister of Energy and Mineral Resources No. T-24/MG.04/MEM.M/2022 dated January 12, 2022, regarding the Approval of Addition of Split to the Cooperation Contract for the East Kalimantan & Attaka Working Area, PHKT gets incentives in the form of additional profit sharing/split.

    President Director of PT Pertamina Hulu Indonesia (PHI)-Regional Kalimantan, Chalid Said Salim, said that the provision of incentives is very important to encourage the continuity of oil and gas operations and the investment needed to increase the recovery of oil and gas reserves and resources in the East Kalimantan & Attaka WK.

“With this incentive, the existing and new field development plans can be continued. This incentive can support increasing reserves and maintaining PHKT production levels so that PHKT can continue to contribute to energy supply for Indonesia," he said.

    In 2021, PHKT recorded an oil production figure of 9.3 thousand barrels of oil per day (MBOPD) and gas production of 40.2 million standard cubic feet per day (MMSCFD). PHKT will continue to strive to improve performance, especially after receiving government incentives, in order to support the investment climate and national energy security.

Investor Daily, Page-9, Saturday, Feb 12, 2022

PHR Starts 2022 by drilling Three Wells

 

    PT Pertamina Hulu Rokan (PHR) - Sumatra Region started 2022, at 00:00 WIB, by drilling wells in 3 locations, namely the PRD-09 Field Rantau (Zone 1) well, MNA well - P03 Field Minas (Work Area) Rokan) and the KRG -PA1 Field Limau well (Zone 4).

Nicke Widyawati

    Drilling wells is a tradition carried out at Pertamina at the turn of the year and especially this year is monitored directly from the PHR War Room, the operational control center which was just inaugurated by the President Director of PT Pertamina (Persero), Nicke Widyawati. The event began with thanksgiving delivered by the President Director of PHR, Jaffee A Suardin.

PHR

"This activity is carried out as a form of gratitude for operating achievements in 2021 and welcoming the new year 2022 with the spirit of SUMATERA (Sustainable, Massive, To Grow, Efficient, Resilient, Aggressive). We, all members of the management and PHR officers, are present to be connected virtually from various locations from Aceh, Riau to South Sumatra," said Jaffee in his statement in Jakarta.

Blogger Agus Purnomo in SKK Migas

    Also attending the inaugural drilling event were SKK Migas officials, Deputy for Planning Benny Lubiantara, Vice President for Operations Sondang Maria, Head of SKK Migas for northern Sumatra, Rikky Rahmat Firdaus, and Director for Development of Pertamina Upstream Subholding Operations Taufiq Adityawarman.

 Jaffee also added that the drilling was carried out as an effort to demonstrate PHR's readiness and commitment to continue to focus on massive and aggressive drilling in 2022 to reach 500 wells, the majority of which are in the Rokan Block Working Area in Riau.

“Sumatra is the backbone and one of the largest contributors of crude oil in Indonesia. In 2022, the Sumatra Region is targeted to produce crude oil of 225 thousand barrels oil per day (BOPD). This is not an easy task but we will do our best to support national energy security,” he continued.

    On this occasion, Jaffee conveyed a message to all officers (as Pertamina's workers are called) to always pay attention to HSSE (Health, Safety, Security, and Environment) both in the field and in the office. Always start any work with prayer and carry out tasks by prioritizing the values ​​of AKHLAK (Trust, Competent, Harmonious, Loyal, Adaptive, Collaborative).

Investor Daily, Page-10, Monday, Jan 3, 2022

ICDCJ Convention 2021 of Upstream Oil and Gas Sector Get Investors

 

The implementation of the 2nd International Convention and Indonesian Upstream Oil and Gas 2021 (IOG 2021) is a potential event to attract investors in the upstream oil and gas sector. In this event, the government auctioned eight oil and gas blocks through two schemes, namely direct bidding and regular auctions.

I believe this convention can attract investors in the upstream oil and gas sector. It's not easy, but the steps in that direction are already there," said Chairman of the IOG 2021 Organizing Committee Lucky Agung Yusgiantoro on the sidelines of holding the 2021 IOG Convention at the Bali Nusa Dua Convention Center (BNDCC), Monday (29/11).

According to him, currently, Indonesia needs large amounts of investment in order to achieve the government's target of producing 1 million barrels of oil per day (BOPD) and 12 billion standard cubic feet of gas per day (BSCFD), by 2030.

The convention, themed Progressing Towards 1 Million Barrel of Oil per Day and 12 Billion Standard Cubic Feet Per Day, was opened by Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan, attended by Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif, Minister of Investment/Head of Coordinating Board Investment (BKPM) Bahlil Lahadalia, Deputy Minister of Finance Suahasil Nazara, and Head of SKK Migas Dwi Soetjipto.

Blogger Agus Purnomo in SKK Migas

Lucky, who is also the Chief Environmental Expert of SKK Migas, stated that in an effort to meet national energy needs, SKK Migas has set a long-term vision for the upstream oil and gas industry, in the form of achieving a production target of 1 million barrels of oil per day and 12 billion standard cubic feet of gas per day by 2020 the year 2030.

To achieve this target, SKK Migas has established a strategic plan for Indonesian Oil and Gas 4.0 which serves as a guide for actors in the upstream oil and gas sector, such as optimizing existing fields for field development plans, accelerating the transformation of resources into production with good supervision and control at each stage. field development plans, as well as accelerating Chemical Enhanced Oil Recovery in contributing to the addition of national oil production.

"The 2021 IOG Convention is an effort by SKK Migas in disseminating information about Indonesia's target of meeting energy needs from the oil and gas sector. We continue to spread the news that we are aiming to achieve that target,” said Lucky.

Auction of 8 Oil and Gas Blocks

Meanwhile, on the same occasion, the Ministry of Energy and Mineral Resources (ESDM) again opened auctions for eight oil and gas blocks this year, of which three are gas blocks. The total resources for these eight oil and gas blocks are estimated at around 500 million barrels for oil and 22.65 Trillion Cubic Feet/TCF for gas. Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji, said that the eight oil and gas blocks were offered through two schemes, namely direct bidding and regular auctions.

"A total of 4 oil and gas blocks were offered with a direct bidding scheme and 4 blocks through regular auctions," he said.

Four oil and gas blocks are offered through this direct offer, namely the Bertak Pijar Puyuh Block with potential resources of 1.38 million tank barrels in South Sumatra, North Ketapang 270.08 million barrels, and 1,589.81 Billion Cubic Feet/BCF off the coast of East Java. , Agung I 985 BCF off the coast of East Java and Bali, and Agung II 16.5 TCF off the coast of East Java, South Sulawesi, and West Nusa Tenggara.

Next, four oil and gas blocks are regularly auctioned, namely West Palmerah Block with potential resources of 71.7 million barrels and 270.9 BCF in South Sumatra and Jambi, Pope 2,555.78 BCF off the coast of Natuna, Maratua II 107.06 million barrels. and 556.77 BCF in North Kalimantan, and Karaeng 64.2 million barrels and 182.08 BCF in South Sulawesi.

"Especially for the Bertak Pijar Quail Block, this is an exploitation block that has ever been produced," said Tutuka.

In this auction, his party offered better terms and conditions for the auction. One of them is the improvement of profit sharing (split) for the cooperation contractors who are determined to take into account the risk factors in the related oil and gas block.

Next, the signature bonus is open for bidding without a minimum limit, First Tranche Petroleum (FTP) is reduced to 10%, and the implementation of the Domestic Market Obligation/DMO obligation price of 100%.

Then, just like the first stage of the auction, oil and gas companies can choose the form of Production Sharing Contract/PSC between cost recovery and gross split. Others, there is no refund of part of the work area (relinquishment) in the third year of the contract and ease of accessing data through the Migas Data Repository (MDR) membership mechanism.

"As well as providing incentives and tax facilities according to applicable regulations," said Tutuka.

The government invites oil and gas companies that have the financial and technical capabilities, are able to meet the minimum requirements for definite commitments, as well as the terms and conditions of the auction, as well as have good performance and track record to be able to participate in the auction of this oil and gas block. For auctions through direct bidding, access to auction documents is open from November 29, 2021, to January 11, 2022.

Furthermore, the submission of participation documents can be done until January 12, 2022. For regular auctions, access to tender documents is open from November 29, 2021, to March 24, 2022, while the submission of participation documents is no later than March 25, 2022.

Optimistic

Deputy Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Fatar Yani Abdurrahman added that the response of oil and gas companies to the second phase of the auction of oil and gas blocks was very positive. This is because the fiscal provisions offered in the auction are very attractive, especially the split for contractors. In addition, the oil and gas reserves of several blocks being auctioned off are also very large.

“For example, the Agung Blocks I and II, which have large reserves of around 2-3 TCF, are also fiscally attractive. Judging from this, we are optimistic that there will be a new contract signing," said Fatar Yani.

Director and Chief Operating Officer of PT Medco International Tbk Ronald Gunawan assessed that the provisions used in the second phase of the oil and gas block auction were an innovation. One of them is related to profit sharing, it seems that the government is no longer guided by the provisions for profit sharing of 85:15 for oil and 70:30 for gas.

"Hopefully, with this new oil and gas block with breakthrough terms and conditions, it will attract more investment," he explained.

Investor Daily, Page-10, Tuesday, Nov 30, 2021

The Economy is a Challenge for the CCUS Upstream Oil and Gas Project

 

The implementation of carbon capture, utilization, and storage (CCUS) technology is the key to reducing emissions in the upstream oil and gas industry to be in line with global low-carbon initiatives. However, economic factors pose a challenge to the use of this technology. 

BP

    Vice President of Subsurface Asia Pacific & India BP Dan Sparkes said the technology factor is no longer a challenge for the implementation of CCUS in the upstream oil and gas industry. This is because the upstream oil and gas industry has experience in injecting CO2 into the bowels of the earth. The main challenge in implementing this CCUS is its economy.

“I think the first thing that must be done for the project to operate is to seek profit from this project (CCUS). Enhanced oil recovery (EOR) based on CO2 is the easiest example," he said at The 2nd International Convention on Indonesian Upstream Oil and Gas 2021 in Bali, Monday (29/11).

Another example is the CCUS Project in the Tangguh Liquefied Natural Gas/LNG refinery complex which is managed by his party. In the refinery project, carbon capture facilities are available, so the expensive investment requirements of the CCUS project have actually been paid for.

"So this kind of project does not need as many incentives as CCUS projects in new oil and gas fields," said Sparkes.

Another thing that can be done to attract investors to work on this CCUS is to set a price for carbon emissions. Not only attracting investors, but the pricing of carbon emissions will also help CCUS projects that are on the verge of the economic threshold.

"So that it can fulfill the economy at a cheaper price," he added.

Blogger Agus Purnomo in SKK Migas

Regarding the implementation of CCUS, the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto revealed that his party is ready to provide support in the form of incentives according to the needs of each CCUS project.

The reason is, cutting carbon emissions has become a policy of the Government of Indonesia, so it must be carried out. He admits that the economy is indeed the key to the CCUS project or not. However, his party will ensure that other costs other than the need for CCUS technology must be as efficient as possible.

“Capex (capital expenditure) apart from low-carbon initiatives, must be really efficient. So, if CCUS is added, the economy can still be maintained. But if it is maximal, it is impossible to operate without incentives, as a consequence, it must provide incentives, "explained Dwi.

Indonesia has great potential for carbon capture. This is because many oil and gas reservoirs have started to run out of reserves. This reservoir can be used to store carbon emissions captured using CCUS technology. His party is mapping out which oil and gas fields can be the location of this CCUS.

"This can be offered to countries near the location to be able to use the storage, as well as to other industries. So if the gas is empty, we can sell storage, "he explained.

Already Rolling

The Ubadari Field development project and the Vorwata Carbon Capture Utilization and Storage (CCUS) project carried out by BP Berau Limited are some of the CCUS projects already underway in Indonesia. According to Deputy Head of SKK Migas Fatar Yani Abdurrahman, the Plan of Development/POD for the project was approved some time ago. Now, his party has signed a memorandum of understanding with BP to ensure this project takes place.

"With the memorandum of understanding, it will accelerate the approval for BP to reach the FID (Final Investment Decision)," he said.

He explained that with the memorandum of understanding lasting for one year, his party hoped that an agreement could be reached with BP so that the CCUS project could be implemented.

"This CCUS is still new, so we really have to study what can be applied again, we are looking for the right way and technology," added Fatar.

Investor Daily, Page-10, Tuesday, Nov 30, 2021