Global Oil and Gas Investors Start Leaving Indonesia

    A number of cooperation contract contractors (KKKS) chose to leave after years of investing in Indonesia's oil and gas fields. After Royal Dutch Shell confirmed that it would leave the Masela Block (Maluku), now ConocoPhillips intends to leave the Corridor Block (South Sumatra).

Blogger Agus Purnomo in SKK Migas

    Deputy Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Fatar Yani Abdurrahman revealed that ConocoPhillips' plan to release Participating Interest (PL) ownership shares in the Corridor Block had been submitted to SKK Migas.

"Verbally, it has been conveyed like that, releasing Participating Interest (Pl) shares," he said.

    Although it has stated its intention verbally, ConocoPhillips has not detailed further the reasons for releasing Participating Interest (PL) ownership shares in the Corridor Block. Fatar confirmed that there is no planned meeting with ConocoPhillips. SKK Migas is still waiting for ConocoPhillips' official proposal submission. ConocoPhillips Vice President Commercial and Business Development Taufik Ahmad declined to comment further on this news.

"Until now there has been no additional explanation apart from what was conveyed by SKK Migas," he said.

    Currently, ConocoPhillips is listed as the contractor for the Corridor Block with a 54% participating interest and Repsol Energy has a 36% interest. Meanwhile, Pertamina has a participating stake of 10%. The production sharing contract (PSC) in the Corridor Block will expire on December 20, 2023. 

    A new production sharing contract was signed in 2019, whereby the existing KKKS received a 20-year extension with a Gross Split PSC. In the period 2023-2026, there will be a transition period, in which ConocoPhillips will still be the operator. However, after this period, the operatorship will be transferred to Pertamina.

Repsol

    Later, in the latest production sharing contract, there will be a change in the amount of Pl, namely Pertamina Hulu Energi Corridor controlling 30%, ConocoPhillips 46%, and Repsol 24%. The planned departure of ConocoPhillips adds to the long list of global oil and gas companies leaving Indonesia. 

    In July 2020, Royal Dutch Shell plans to withdraw from the Masela Block Perpetual Gas Project. Shell, which holds a 35% participating stake, is still looking for a replacement candidate.

    Another investor who also intends to leave is PT Chevron Pacific Indonesia (CPI) which will release its participating stake in the Indonesia Deep Water Development (IDD) Block. After Shell left, SKK Migas Deputy Operations Julius Wiratno said the search for partners for the Masela Block is targeted to be completed by the end of this year.

"Shell is in the process of looking for a replacement until the end of this year. Chevron is the same way. This is common in the business world," he said.

    In this situation, Julius ensured that the government could not intervene in the ongoing business-to-business process. The Executive Director of the Reforminer Institute, Komaidi Notonegoro, believes that the government needs to evaluate the upstream oil and gas business regarding the plans of global investors who want to leave.

"However, domestic business actors such as Pertamina need partners," said Komaidi Notonegoro.

    The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) projects that this year's oil and gas lifting will reach 97.3% of the target in the 2021 State Budget (APBN). Head of SKK Migas Dwi Soetjipto projects that this year's oil and gas lifting reached 1.6 million barrels of oil equivalent per day (MBOEPD) or lower than the target in the 2021 State Budget of 1,711.78 MBOEPD.

    Referring to the realization in the first quarter of 2021, according to Dwi, there is still pressure on oil and gas production. On the other hand, there was also an unplanned shutdown and a delay in drilling execution. 

"There is also a delay in the onstream schedule of several oil and gas fields so that the total is reduced by 25,000 barrels per day and gas by 99 mmscfd from the target that has been set," he said.

    Dwi added, in order to cover the existing production gap, SKK Migas targets additional drilling activities this year. They predict drilling activities can increase to 700 activities.

Kontan, Page-13, Wednesday, June 2, 2021

Nicke Widyawati is in the rank of the 16 most influential women in the world

 

Global business media, Fortune named Pertamina's President Director Nicke Widyawati as the Most Powerful Woman in the World 2020. Nicke was ranked 16 out of 50 women in the world who were considered to have the ability to control the company they lead. Fortune assessed that Nicke was able to handle a state-owned company with annual revenue of more than US $ 54.6 billion and 32,000 workers worldwide.

Nicke Widyawati

Nicke's ability to control the company was strengthened by the government's trust to re-elect him to lead the company's transformation into a holding company in the oil and gas sector. In response to this, Nicke was grateful and received positively for Fortune's coronation as one of the most influential women in the world by Fortune. Nicke considered that Fortune's ranking was an appreciation not only for herself but also for the entire Pertamina team.

Pertamina 

According to Nicke, as the top level of leadership at the national state-owned oil and gas company, he has the responsibility to ensure Pertamina continues to provide energy for the nation and state and to bring Pertamina as a global energy company that is the driving force for national economic growth.

"The challenges of the future of energy are in sight, and we still prioritize service to the nation, community service, and respond to global energy challenges. This position is the result of the hard work of all elements in Pertamina and also the support of all stakeholders and the Indonesian nation, ”said Nicke.

Fortune also considered Nicke Widyawati as the President Director of Pertamina very worthy of being ranked 16 because he was able to innovate in controlling the company during the Covid-19 pandemic so that Pertamina's losses could be suppressed, far better than other global oil and gas companies.

Fajriyah Usman

VP of Corporate Communication of Pertamina, Fajriyah Usman, said that this list was an annual ranking that specifically highlighted the most influential women in international-based business. Mrs. Nicke Widyawati is the only Indonesian woman on the list of 50 Most Influential Women iN Fortune's 2020 world.

Fortune also placed Pertamina's Managing Director ahead of the CEOs of various well-known companies in the global arena, such as Temasek, which is the largest state-owned company in Singapore, Shell, a Dutch multinational oil and gas company, and other leading CEOs such as Unilever, PepsiCo, Novartis, Puma Energy, Starbucks, Morgan Stanley , etc.

"This achievement makes Pertamina and Indonesia proud. Mrs. Nicke has represented all women in Indonesia in world recognition, "said Fajriyah.

Fajriyah believes this recognition will be an inspiration and role model for all Pertamina employees to continue to work hard to provide energy and bring Pertamina as a global oil and gas company. The concern of Pertamina's Board of Directors, the Board of Commissioners, and all levels of Pertamina's management is how to manage a company that can produce the best performance that can contribute to the nation and state.

"We hope that international trust will continue to increase in Pertamina, which carries a vision as a world-class national energy company and is able to face the global energy challenges going forward," said Fajriyah.

Investor Daily, Page-10, Friday, Oct 23, 2020

Kadin Connects Oil and Gas Business Entrepreneurs with Shell

    The East Java Chamber of Commerce and Industry (Kadin) continues to strive to revive the economy of East Java, one of which is by opening up opportunities for entrepreneurs to invest in the oil and gas sector with Shell Indonesia. Previously, the East Java Chamber of Commerce and Industry has also been bridging entrepreneurs in East Java to partner with Pertamina Lubricant.

The East Java Chamber of Commerce and Industry (Kadin)

    East Java Kadin Chairman Adik Dwi Putranto said that although currently, it is still in a pandemic condition, the potential for the oil and gas business is still very attractive and potential. This is because the movement of people and goods is still necessary to maintain the stability of the economy and the country as a whole.

Shell Indonesia

"At the start of the pandemic, the oil and gas business also dropped dramatically due to the implementation of the Large-Scale Sausage Restriction (PSBB) policy in a number of regions. However, currently, it has increased and in East Java, it is close to normal. For this reason, we are very interested in Shell's desire to open up opportunities to do business in oil and gas. Because in these conditions any business opportunity must be tried. This is what is needed and there are already some friends who are thinking about expanding or shifting to other businesses. The East Java Kadin encourages entrepreneurs in East Java to seize these opportunities, "said Adik Dwi Putranto during the East Java Kadin Talk with the theme" The potential of the energy business in the new normal era.

    According to him, these opportunities become more attractive when entrepreneurs find it easy to do business.

"This is the concern of the East Java Chamber of Commerce and Industry. We will try to guard these opportunities into reality. Because there are actually many opportunities but there are also many obstacles, for example in terms of licensing, "he said.

Bhirawa, Page-10, Monday, Oct 19, 2020

32 Companies Interested in Shell Shares in Masela Block

The Ministry of Energy and Mineral Resources (ESDM) stated that there are 32 oil and gas companies that have been allowed to open data (open data) of the Masela Block. The data will be opened after Shell has released its participating interest (PI) in the Masela Block.

Acting Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Ego Syahrial, confirmed that Shell would indeed release PI ownership in the Abadi LNG Project, the Masela Block. The opening of data for oil and gas companies interested in taking Shell's PI has also been approved.

the Masela Block

"There are 32 oil and gas company candidates who are in the process of opening this data. The government is certainly looking for the best competence, "he said.

According to him, 32 oil and gas companies that are currently disclosing this data are large oil and gas companies. Not only that, but foreign companies interested in taking Shell shares have also been given permission to view the data.

"That means if there are companies from within the country, maybe just a few companies. Who is the biggest company in the country, most importantly Pertamina, Medco, ”said Ego.

Despite the change in shareholders in the Masela Block, Ego emphasized that the Abadi LNG Project must continue.

"Of course, the government's goal is how the Eternal LNG Project will continue and in 2027 the gas can [operate]. That's all, "said Ego.

Dwi Soetjipto

Previously, the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Dwi Soetjipto revealed that the process of transferring ownership of PI is likely to be completed next year if Shell has obtained a potential buyer.

"I think it will last up to 1-1.5 years. If the divestment will continue, no later than 2021 it must be completed, ”he said.

The Abadi project is targeted to start operating in the second quarter of 2027. The US $ 19.8 billion projects undertaken by Inpex Masela Ltd is projected to produce 150 mmscfd of piped gas and 9.5 million tons of LNG per year.

Currently, Shell holds 35% PI in the Masela Block, while the rest is owned by Inpex. Based on data from SKK Migas, until last March, the work on the Abadi Project's environmental impact analysis (Amdal) approval was still 43.41% of the target of 47.27%.

In addition, the auction process for front end engineering design / FEED onshore liquefied natural gas / LNG refinery facilities, production and floating production facilities, storage and offloading / FPSO, gas pipelines, as well as subsea umbilical, riser, and flowline (SURF) facilities are still taking place.

Oil and Gas Investment

Meanwhile, the Ministry of Energy and Mineral Resources noted the realization of national oil and gas investment in the first half of 2020 amounting to the US $ 5.6 billion or only 38.6% of the target of US $ 14.5 billion. However, with the starting to increase in oil prices, oil and gas investment in the future will improve. 

    Acting Director-General of Oil and Gas at the Ministry of Energy and Mineral Resources, Ego Syahrial, said that his party continues to strive for optimal oil and gas investment climate.

However, the Covid-19 pandemic, which depressed global crude oil prices, he admitted had an impact on national oil and gas investment. This is because the drop in oil prices was followed by cuts in investment budgets by major world oil and gas companies.

"We had targeted oil and gas investment at the US $ 14.5 billion, but the realization still reached the US $ 5.6 billion. So it is still far away, still a third, "he said.

Of the US $ 5.6 billion investment, the US $ 4.85 billion came from the upstream oil and gas sector and the US $ 712.26 million from the downstream oil and gas sector. When compared with the Performance Report (Lakin) of the Directorate General (Ditjen) of Oil and Gas 2019, the realization of downstream oil and gas investment in the first semester of 2020 is quite good.

This is because, in the one year period in 2019, the realization of downstream oil and gas investment was the only US $ 1.06 billion. In detail, the realization of downstream oil and gas investment until last June, namely investment in processing infrastructure of the US $ 299.17 million, transportation of US $ 346.44 million, storage of US $ 21.67 million, and trade of US $ 44.98 million.

ESDM Ministry's Oil and Gas Program Development Director Soerjaningsih revealed that the downstream oil and gas project investment includes a refinery project undertaken by PT Pertamina (Persero).

"The downstream investment comes from the Balikpapan and Tuban refinery projects, as well as the BBM (fuel oil) and BBG (gas fuel) transportation projects," he said.

For the performance of the upstream oil and gas sector, Ego said that the realization of oil lifting as of last June had approached the change target of 705 thousand barrels per day (BPD). Even if compared to the initial target of 755 thousand bpd it is indeed very far away.

“Like it or not, the upstream oil and gas performance is affected by low investment. This is the impact of all major oil and gas companies in the world to cut investment, "he said.

Oil and Gas Block Auction

To increase oil and gas investment in the future, Ego added that the government will auction off 10 conventional oil and gas blocks this year. Along with the preparation for the oil and gas block auction, his party has communicated with potential investors regarding the schedule for opening this oil and gas block auction. Several investors asked for the auction to be postponed for the rest of the year in the hope that oil prices would improve.

"The announcement option in the near future will be decided whether it is the end of the third quarter or the beginning of the fourth quarter of this year," he said.

The oil and gas block auction is also planned not to be held simultaneously. Ego explained that currently the final evaluation of the 10 oil and gas block candidates is being carried out. This evaluation is more attractive terms and conditions and the implementation of production sharing contract / PSC gross split or cost recovery.

"We evaluate it for maximum results by considering input from stakeholders which we do pro-actively," he said.

Based on ESDM Ministry data, the total potential oil resources of the 10 oil and gas blocks are 3.44 billion barrels and 5 trillion cubic feet of gas. The five oil and gas blocks that are regularly auctioned are Merangin III Block in South Sumatra & Jambi (Onshore), Sekayu in South Sumatra (Onshore), North Kangean in East Java (Offshore), Cendrawasih VII in Papua (Offshore), and Mamberamo in Papua ( Onshore and Offshore).

Meanwhile, the five oil and gas blocks being auctioned with a direct bid mechanism are the West Palmerah Block in South Sumatra and Jambi (Onshore), Rangkas in West Java and Banten (Onshore), Liman in East Java (Onshore), Bose in East Nusa Tenggara (Onshore and Offshore). ), as well as Maratua II in Kaltara (Onshore and Offshore).

Investor Daily, Page-12, Thursday, August 6, 2020

Government Reviewing Masela Block Profit Sharing

The government is considering changing the production share of gas or split in the management of the Masela Block. It seems that the plan is to attract investors to replace Royal Dutch Shell (Shell), which plans to sell the 35% participating interest in the Abadi Gas Field. 

Royal Dutch Shell (Shell)

    Referring to the agreement in the head of agreement (HoA) in 2019, the government and lnpex Corporation as the controlling shareholders of the Masela Block agreed to split the gas distribution by 50% (government) and 50% (lnpex and consortium).

Dwi Soetjipto

Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Dwi Soetjipto, assessed that at the time of the continuation of the Shell divestment, his party also saw potential or room for split changes. "We also found points or potentials for this economic project to be in a reasonable government split. We will continue to discuss it," Dwi said.

INPEX CORPORATION

However, he is still reluctant to detail the objectives of the split change and the details of the changes being considered, so it is not yet known whether this profit sharing will increase the government's portion or even increase the INPEX portion. Dwi only said that Masela's liquefied natural gas (LNG) product enthusiasts had reached 50%.

"PLN has expressed an interest of at least 2 to 3 million tons per year (MTPA). From abroad, there are Japan, China, and Taiwan," said Dwi.

With regard to Shell's plan to leave, the Ministry of Energy and Mineral Resources (ESDM) noted that 32 companies are interested in replacing Shell.

Investor interest

Acting Director-General of Oil and Gas, Ego Syahrial confirmed that Shell had conducted open data to see the potential development of the Masela Block.

"It's true that Shell is in the process of opening this data. There are 32 candidates who are currently in the process of opening this data," said Ego Syahrial.

the Masela Block

Even the Ministry of Energy and Mineral Resources has approved foreign companies to see the block data. However, the government does not want to disclose the names of 32 companies interested in investing in the Masela Block. One thing is for sure, if Shell does leave, the government insists the Masela Block project will continue.

Besides investors, the Masela project is still hampered by land problems. Maluku Governor Murad Ismail promised to be ready to facilitate the land acquisition. Together with the Tanimbar Islands Regency Government and Southwest Maluku, the land acquisition of the Masela Block will be completed through adat and deliberation processes.

"We will solve the land problem as well as possible since it has been discussed that many people have controlled the land," he said.

Therefore, the Maluku Provincial Government is also waiting for the decision and the readiness of lnpex to acquire some land for LNG development.

"We'll just wait. It is impossible to solve the land problem if there is no encouragement from lnpex," he said.

Dwi Soetjipto added land acquisition will begin if the Environmental Impact Assessment (EIA) has been completed.

Kontan, Page-12, Thursday, August 6, 2020

EIA Completion of the Abadi Abadi LNG Project begins

After being stopped due to the approval of the Covid-19 pandemic, the process of discussing the Impact of the Environmental Impact (EIA) of the Abadi LNG Project, the Masela Block will start again in the second semester. Not only that, some foreign gas buyers who are interested in taking liquefied natural gas (LNG) produced by this project.

Dwi Soetjipto

SKK Migas Head Dwi Soetjipto said that Inpex Corporation and Shell continue to work on the Abadi LNG Project. At present, EIA approval for this project has been approved. Needed, Inpex as an operator will continue to be completed by Amdal so other processes can be carried out, including land acquisition.

"Inpex can conduct a survey in the second semester, especially for rainy season data. Then [the process] gives an EIA, then other things can be processed. This is a condition for the investor in the execution of the land, which is the EIA, okay, "he said.

The Abadi LNG project

Related to land acquisition, the Governor of Maluku. Murad Ismail is committed to facilitating it. The Abadi LNG project is a large project that submitted its development plan which was witnessed directly by President Joko Widodo so that the local government will support this project. In addition, this project is also intended for the people of Maluku.

"Since all land permits above 5 hectares are ours, I will help and discuss with the regents of Tanimbar and Southwest Maluku," he said.

He decided, his party would strive so that there were no challenges in the acquisition of this land. For example, it has previously provided 27 hectares of land on Nustual Island as the port side of the Abadi LNG Project. 

    The decision was stipulated in the Maluku Governor's Decree No. 96 of 2020 on the 14th of February 2020. Therefore, Murad asked the contractor not to doubt the tolerance of the local government regarding the Abadi LNG Project. Even if there is compensation for land acquisition, it will facilitate so that the amount is not excessive.

"We support that everywhere, we choose adat and deliberation. We will be picky about this land, "he said.

However, to complete the execution of land acquisition depends on Inpex.

"Procurement of land depends on Inpex wanting to be finished anytime. We just wait. It is impossible to finish if there is no support from Inpex, "he added.

Based on SKK Migas data, as of last March, the work on the Environmental Analysis (Amdal) of the Abadi Project has only reached 43.41% of the target of 47.27%. In addition, the auction process for the work of Front End Engineering Design / FEED onshore liquefied natural gas / LNG refinery facilities, floating production and loading and unloading facilities (floating production, storage, and unloading / FPSO), gas pipelines, and umbilical underwater facilities, risers, and flowline (SURF) is still ongoing.

Aside from land, Dwi admitted, the Covid-19 pandemic also considered the sale of LNG from the Abadi LNG Project. Because, for the project to reach a Final Investment Decree / FID, amounting to 80% of the total LNG production target of 9.5 million tons per year, there must be a buyer. So far, PT PLN (Persero) has approved the purchase of LNG of 2-3 million tons per year and PT Pupuk Indonesia (Persero) 150 million standard cubic feet per day / MMscfd.

"From abroad, there are Japanese, Chinese, and Taiwanese companies that are interested in buying, we immediately receive support," Dwi said.

It was revealed, his side was still hoping that the Abadi LNG Project FID could be accepted in 2022. Before that, along with LNG marketing, the project design work had to be completed.

"From 2022 to 2027, EPC (engineering, procurement, and construction) can continue," he said.

The Abadi Project launches in the second quarter of 2027. The US $ 19.8 billion replacement project undertaken by Inpex Masela Ltd is projected to produce 150 mmscfd of gas piped and in the form of LNG 9.5 million tons per year.

Investor Daily, Page-10, Wednesday, August 5, 2020

Global Oil and Gas Company Tighten the Belt

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

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

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

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

Michael K. Wirth

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

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

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

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

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

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

Cameron Van Ast

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

the IDD project Chevron

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

Dwi Soetjipto

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

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

There is Still Hope in Upstream Oil and Gas

Upstream oil and gas investment in Indonesia is believed to be still prospective, despite a number of challenges due to fluctuations in world oil prices and the Covid-19 pandemic. Moreover, the government has also given the flexibility to investors to choose the form and production sharing contract in oil and gas activities.

The policy is believed to provide legal certainty and increase oil and gas investment in Indonesia. But of course, it must be punctuated by the right strategy and oil and gas investors to survive and get out of the crisis.

Arcandra Tahar

Former Minister of Energy and Mineral Resources (ESDM) for the 2014-2019 period Arcandra Tahar said investment in upstream oil and gas was not merely a matter of the political situation in a country. According to him, the majority of investors will enter the oil and gas project which is considered to provide good profits for the company.

"Investment does not recognize citizenship. That is, where there is a profitable investment, investors will enter, "he said.

 

the Masela block

Referring to the news of Shell's departure from the Masela and Chevron Block projects on the Indonesia Deepwater Development (IDD) project, Arcandra said many factors could trigger the decision. Comprehensively the decision could be influenced by the shifting focus of the company relating to economic value. But the withdrawal of two global oil and gas companies from the project in Indonesia cannot be used as a reference that investment conditions in Indonesia are not good.

"Can you see that their assets (Investors) are sold abroad? I think so. What does it mean, if we only look at it from one side, the investment climate might not be okay. "

He considered the mix of business portfolios in oil and gas companies could be one strategy to get out of the crisis. According to him, the weakening of world oil prices and falling demand that occurred some time ago along with the Covid-19 pandemic was one of the extraordinary events.

However, basically the oil and gas industry is a business whose principles always fluctuate, so there should be mitigation to go through difficult times. Was this not prepared in advance by the oil and gas company? I think it's been prepared, "Arcandra said.

Shell

For this reason, the business portfolio mixes between upstream and downstream needs to be balanced considering that there are still oil and gas companies that can get profit, in a state where oil prices are skyrocketing or weakening. According to him, this was also done by large-scale global oil and gas companies such as Shell and Chevron. In addition, the oil and gas companies have begun to apply the trend to anticipate difficult times.

"So a strong company, a balance between upstream and downstream. Even if a medium company has a good strategy, besides having a business in the upstream, they also anticipate it in the downstream, "he explained.

Dwi Soetjipto

SKK Migas Head Dwi Soetjipto projects that oil and gas investment this year will only reach US $ 11.6 billion, down 16% from the target of US $ 13.8 billion. According to him, global upstream oil and gas investment trends this year are also projected to fall by around 30% to the US $ 228 billion from the initial 2020 target of US $ 325 billion.

"So in Indonesia the decline is far better than the global upstream oil and gas trends," he said.

PORTFOLIO CHANGE

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

He revealed that the plan had been reviewed since the beginning of this year and he dismissed that the decision was related to the acquisition of Chevron in Noble Energy shares on July 20, 2020.

PT. Chevron Pacific Indonesia's

Chevron Pacific Indonesia's Corporate Communication Manager Sonitha Poernomo added that the Phase 2 IDD project could not compete for capital in Chevron's global portfolio. Meanwhile, Shell was quoted from the official website of Shell Global, dividing the oil and gas company's business into the upstream business, integrated gas, renewable energy, and downstream business.

Sonitha Poernomo

In line with Arcandra, Secretary-General of the National Energy Board Djoko Siswanto is optimistic that Indonesia's upstream oil and gas sector is still in good condition and attractive to investors. 

Hilmi Panigoro

    On the other hand, President Director of Medco Energi Hilmi Panigoro revealed that Indonesia's biggest challenge to bringing in investment in the upstream oil and gas sector is legal certainty which is more attractive to investors.

According to Hilmi Panigoro, there are many investors who prefer other countries than Indonesia even though the tax conditions and political conditions are not better. Hilmi said this could happen because the investors considered that they did not have more risks given the clear legal certainty.

"For example, now the government is changing its paradigm, energy is not a source of revenue, then gas prices are lowered, but the contractor's rights must be maintained so that investors believe. So whatever the form of the regime, what is important right now is how this new law can be a guarantee, so the signed agreement must be maintained, "he explained.

Regarding oil and gas production sharing contracts, ESDM Minister Arifin Tasrif issued Minister of Energy and Mineral Resources Regulation No. 12 of 2020 concerning the Third Amendment to the Minister of Energy and Mineral Resources Regulation No. 8 of 2017 concerning Gross Split Production Sharing Contracts.

In Article 2 paragraph (2) of the Ministerial Regulation, it is explained the form and cooperation contract can use Gross Split, Cost Recovery, or other cooperation contracts. Arifin also abolished the provisions regarding the management of the Work Area that ended the contract period and was not extended, the government imposed a Gross Split for the next period. In addition, in the case of Work Areas that will expire in the contract period, the government can stipulate all cooperation contracts or Gross Split.

Bisnis Indonesia, Page-10, Monday, August 3, 2020

Masela LNG Project Hampered by Land Problems

The Masela Block liquefied natural gas (LNG) refinery project in the Tanimbar Islands, Maluku, faces a winding road. After Royal Dutch Shell will leave the Masela Block, the problem now arises from the unfinished refinery holding.

Referring to the notes of the Special Task Force for Upstream Oil and Gas Activities (SKK Migas) until June 2020, the available land is still partial. Even though this project is targeted to operate or onstream by 2027.

    The problem of the Contribution is potentially more complicated. Because reportedly, the Sinar Mas Group is said to have bought a portion of land in the village of Lermatang, South Tanimbar, Tanimbar Islands, Maluku Province. Its location is in the Weminak River area, the border between Lermatang Village and Bomaki Village.

Even though Maluku Governor Murad Ismail in early June this year submitted the Governor's Decree regarding the determination of the allocation of the Masela liquefied natural gas refinery port on Nustual Island, Lermatang Village, South Tanimbar, to the Head of SKK Migas Dwi Soetjipto. In the Maluku Provincial Government Decree, the allocation is 27 hectares (ha). The land in that location is said to have been bought by the Sinar Mas Group.

"I have got a report. But because the large-scale land acquisition is handled by Jakarta, we submit this problem to Jakarta (SKK Migas). " Rinto Pudyantoro, Chief Representative of SKK Migas Papua Maluku.

But Rinto was reluctant to mention on behalf of what company and what price of land purchased by the Sinar Mas Group. Rinto only stated that, in principle, the Masela Blok LNG refinery project was a state project, so the land was bought and acquired on behalf of the Minister of Finance and became the property of the state. Likewise, private property to be purchased.

Gandi Sulistiyanto

The Managing Director of the Sinar Mas Group, Gandi Sulistiyanto, denied that he had bought or even owned land in the area.

"I have checked with the forestry and mining unit, there is no land in the area. Where's the news from? Which regency and province? "He said.

Acting Head of the SKK Migas Program and Communication Division, Susana Kurniasih, said that the Sinar Mas Group did not coordinate with SKK Migas.

"If it is true that Sinar Mas will be active in Lermatang Village, we hope that the activities will not interfere with the Masela project plan," he said.

    Moreover, the Tanimbar District Head, Maluku Governor and the Minister of Environment and Forestry (LHK) have agreed on the needs of the LNG refinery allocation. Head of SKK Migas. Dwi Soetjipto emphasized that the Masela onshore LNG Plant project should not be disrupted. The Central Government and regional governments have committed to that, "he said.

Inpex Corporation

    Regarding the prospective LNG Plant location, the management of Inpex Corporation stated that it always refers to the Decree of the Maluku Governor. The exact location and area of ​​the Abadi LNG refinery will be finalized after the results of the survey and design study have been studied, "said MN Kurniawan. Act Corporate Communication Manager Inpex Masela.

Kontan, Page-1, Monday, July 27, 2020