Total Working on Pertamina Program

    

    PT Total E&P Indonesie, operator of the Mahakam Block, will start drilling oil and gas wells in the block starting in March 2017 which includes the PT Pertamina Hulu Mahakam (PHM) program, a subsidiary of PT Pertamina.

    Pertamina Hulu Mahakam will be the operator of the Mahakam Block starting January 1, 2018, replacing the Total E&P Indonesie. Next year will be a transition period for the management of the oil and gas block located in East Kalimantan.

    During the transition period, Pertamina began to invest in anticipating that oil and gas production in the block would not decline. Vice President Finance, General Services, HR & Communications of Total E&P Indonesie Arividya Noviyanto said, Total will drill nine wells, while 19 wells will be drilled on behalf of PT Pertamina Hulu Mahakam (PHM) as the new operator of the block located in East Kalimantan.

    PT Pertamina Hulu Mahakam (PHM) will become the operator of the Mahakam Block starting January 1, 2018. Total will maintain activities in the Mahakam Block until October 2017 to maintain production stability in 2018 after the operator changes.

The Mahakam Block

    The oil and gas well drilling activity in early March was under the program of PT Pertamina Hulu Mahakam, but Total E&P Indonesie was working on it. Gas production in the Mahakam Block this year is targeted to reach 1.43 billion cubic feet per day (BCFD) and 56,000 barrels per day (BPD) of oil and condensate. Currently, the realization of gas production reaches 1.67 BCFD and 64,000 bpd of oil and condensate.

    This achievement came from activities carried out in several fields such as Peciko 7B, Bekapai Phase 2 as well as Sisi Nubi ZB. According to him, the contribution from the field allows oil and gas production to be maintained until the end of this year with the realization of an investment of US$ 900 million. For next year's investment plan, he said the process of discussing the 2017 Work Program and Budget/WP&B has not been completed.

    The challenge for field development is the low price of oil which has not had a significant impact on the selling price of gas. The reason is, he said gas prices will usually show changes after three to six months of changes in oil prices. The transition period of management from Total to Pertamina and the age of the block which has reached 50 years is a challenge for operators.

Blogger Agus Purnomo in SKK Migas

    However, based on data on oil and gas production targets ready for sale or lifting in 2017 from the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), the contribution of oil and condensate to Total E&P Indonesie Mahakam Block is 52,852 BPD and gas 1,164 MMscfd. Arividya admitted that Mahakam's oil and gas production could be affected by the shift of operators. However, he hopes that the target can be achieved even though next year's production activity in the Mahakam Block is lower than this year.

Bisnis Indonesia, Page-30, Friday, Dec 9, 2016.

Upstream Oil and Gas Investigation Realization Declines

    Upstream oil and gas investment this year is lower than last year's US $ 12.05 billion. The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) projects that upstream oil and gas investment by the end of this year will only reach the US $ 11.4 billion. Meanwhile, the realization of upstream oil and gas investment from January to November 2016 reached the US $ 10.43 billion.

Blogger Agus Purnomo in SKK Migas

    SKK Migas Deputy for Financial Control, Parulian Sihotang, said that this year's upstream oil and gas investment target will not be achieved because it is still affected by low oil prices. Cooperation contract contractors (KKKS) have reduced their activities this year. 

    The investment realization was dominated by production activities which reached US $ 10.3 billion, while exploration activities were the only US $ 309 million. SKK Migas noted that there are ten new oil and gas production facilities that could be completed this year.

Block Cepu

    The blocks include Train-B Block Cepu (ExxonMobil Cepu Limited EMCL), onshore receiving facility (ORF) Bukit Tua Field (Petronas Carigali Ketapang 2 Limited), Donggi and Pondok Makmur (PT Pertamina EP), Dayung Compression-2 (ConocoPhilips Grissik Ltd.), and IDD Bangka (Chevron Indonesia) In addition, the North Duri Development Area 13 (PT Chevron Pacific Indonesia), Karendan (Ophir Energy), KRA South (Star Energy Kakap Ltd.), and Ario Damar-Sriwijaya Phase-1 (Tropical Pandan Energy).

    Oil and gas investment this year is low because several activities carried out by contractors are also still below target. The realization of exploration well drilling was only 43 units of the target of 67 units and development wells were only 223 wells of the target of 245 wells.

"At least US $ 11.4 billion will reduce activities due to prices," he said.

    Head of SKK Migas Amien Sunaryadi said that next year's investment cannot be estimated because he is waiting for the 2017 work plan and budget / WP & B preparation process.

     SKK Migas is optimistic that this year's oil and gas production target is ready to sell or lifting at 821,800 barrels per day (BPD) of oil and gas 6,643 MMscfd.

"There is a decrease of 13.3% if you do nothing. 2016 is great for maintaining its declining, ”he said.

    This year, SKK Migas has approved 27 plans of development / PoD and plans of future development / POFD. The entire POD and POFD are estimated to be able to increase oil and gas reserves by 204 million barrels of oil equivalent.

    From the POD there is also an oil and gas investment plan of up to the US $ 2.85 billion. Amien added that the gross revenue from oil and gas as of December 31 was the US $ 23.98 billion. This figure includes a cost recovery of US $ 11.47 billion, thus a net income of US $ 12.5 billion. 

    The revenue sharing for contractors is US $ 3.22 billion and the government is the US $ 9.29 billion. The 2017 lifting production target, which is 815,000 bpd of oil and 6,440 MMscfd of gas, will be borne by ten large contractors.

Chevron Pacific Indonesia

    Contractors supporting oil lifting are Chevron Pacific Indonesia (Block Rokan) 228,908 bpd, ExxonMobil Cepu Limited EMCL (Cepu Block) 200,000 bpd, PT Pertamina EP (spread in Indonesia) 84,214 bpd, Total E&P Indonesie (Mahakam Block) 52,852 bpd.

    Lifting was supported by PT Pertamina Hulu Energi Offshore North West Java Limited (Block ONWJ) 36,500 bpd, CNOOC SES Limited (Blok South East Sumatra) 31,398 bpd, Chevron Indonesia Company (Blok East Kalimantan) 17,700 bpd, ConocoPhilips (Blok B South Natuna) 17,400 BPD, Petronas Carigali Ketapang Limited (Ketapang Block) 15,631 BPD and PetroChina International Jabung Limited (Blok Jabung) 14,400 BPD.

Bisnis Indonesia,Page-30,Tuesday,Dec,6,2016

Amendment to Mahakam Block Contract Approved

The Ministry of Energy and Mineral Resources approved the Amakam Working Area Production Sharing Contract (WK) Amendment. The Production Sharing Contract Amendment was signed by SKK Migas and Pertamina Hulu Mahakam on October 25, 2016, and will be effective on January 1, 2018. This amendment must be carried out as a basis for implementing activities and providing legal certainty during the transfer of the Mahakam WK Operation.

the Mahakam WK Operation

In addition, this amendment can also maintain the sustainability of oil and gas production while providing legal certainty in the implementation of activities in the Mahakam WK Operation Transfer from existing contractors to Pertamina, said the Minister of Energy and Mineral Resources ESDM Minister Ignasius Jonan in a conference in Jakarta.

Amendments to the Mahakam WK Cooperation Contract (KKKS), among others, are related to financing that can be carried out by Pertamina on oil and gas operations that are needed before the effective date, which is carried out by the Existing Contractor. The costs incurred by Pertamina are included in the operating costs whose returns are made after the effective date.

With this amendment, Pertamina can invest early and the production of the Mahakam Block will be maintained. This is all as a form of government trust in Pertamina. Arcandra said that the amendment was the basis for Pertamina to make an early investment related to Mahakam drilling to maintain the level of Mahakam production.

Work program and budget will be carried out 24-25 November 2017 will be carried out by drilling 6 wells by Total and 19 wells by Pertamina Hulu. He said Pertamina plans to invest an estimated US $ 180 million in the form of drilling 19 wells before the effective date. It is expected that natural gas production from the Mahakam WK can be maintained at around 1.2 BSCFD and condensate at around 20,000 BCPD in 2018-2019.

Amien said that the amendment of the Production Sharing Contract was that the costs for drilling 19 wells in the Mahakam Block in 2017 included cost recovery in 2018. What Pertamina issued after the amendment was signed to be effective on January 1, 2018, it could go into cost recovery. 

      But the cost recovery is 2018. Amien said that the legal protection of the mechanism is the revision of the Minister of Energy and Mineral Resources Regulation No. 15 of 2015 concerning Management of Oil and Gas Work Areas that Will End Their Cooperation Contracts. This regulation has been completed and is in the process of recording the national sheets.

He said that the general mechanism and cost recovery are expenditures after the effective Production Sharing Contract date. However, for the Mahakam Block, there is a transition period and expenditure is required for drilling before the contract is effective. After it is drilled, it is closed. Production (19 wells) has just been released in 2018 so that production will not drop.

Dwi Soejipto

Pertamina President Director Dwi Soejipto said an investment of US $ 180 million was prepared during the transition to the takeover of the Mahakam Block in 2017. The investment was intended to maintain the level of production of the Mahakam block after the amendment to the Mahakam Production Sharing Contract.

Total EP Indonesie

Dwi said that PT Pertamina Hulu Mahakam had compiled the 2017 Mahakam Block Work Program and Budget (WP and B) and was being finalized. Based on the WP and B, assisted by Total EP Indonesie as the executor, Pertamina Hulu Mahakam prepared 2017 drilling activities with a target of 19 wells with an investment of around the US $ 180 million.

SKK Migas is preparing technical guidelines for the implementation of Pertamina Hulu Mahakam WP and B with the principle of activities carried out by Total EP Indonesie on a no-cost no profit basis, with all costs and risks of activities being borne by Pertamina Hulu Mahakam. Drilling wells are targeted to start production on January 1, 2018.

"Pertamina is funding, an implementation by Total. He said Pertamina Hulu Mahakam together with Total EP Indonesie and Inpex Corporation is completing the management transfer agreement which includes the Transfer of Operatorship Agreement (TOA) and Bridging Agreement (BA). TOA which was signed by the parties on July 29, 2016, will be harmonized with the amendment of the Mahakam Block Revenue Sharing Contract.

Whereas BA is needed related to the assistance of the implementation of Pertamina Hulu Mahakam activities by Total Indonesie in the period of 2017. We are targeting the completion of the Bridging Agreement and amendments to the TOA by the end of November 2016.

The President Director of Total EP Indonesie Hardy added that maintaining oil and gas production when transferring the management of the Mahakam Block was the main focus. It will drill 6 wells in 2017 to reduce the rate of decline in production. Meanwhile, about 30 percent Participating Interest (PI) is still under discussion. PI 30 percent we still continue to talk about. But that was the last priority at this time.

IN INDONESIA

Amendemen Kontrak Blok Mahakam Disetujui

Kementerian ESDM menyetujui Amendemen Kontrak Bagi Hasil Wilayah Kerja (WK) Mahakam. Amendemen Kontrak Bagi Hasil ditandatangani oleh SKK Migas dan Pertamina Hulu Mahakam pada 25 Oktober 2016 dan akan berlaku efektif pada 1 Januari 2018. Amendemen ini harus dilakukan sebagai landasan pelaksanaan kegiatan dan memberikan kepastian hukum pada masa alih Operasi WK Mahakam tersebut. 

Selain itu, amendemen ini juga dapat menjaga keberlangsungan produksi minyak dan gas bumi sekaligus memberikan kepastian hukum dalam pelaksanaan kegiatan pada Masa Alih Operasi WK Mahakam dari kontraktor eksisting ke Pertamina, tegas Menteri ESDM Menteri ESDM Ignasius Jonan dalam konpers di Jakarta.

Amendemen Kontrak Kerja Sama (KKS) WK Mahakam antara lain berkaitan dengan pembiayaan yang dapat dilakukan oleh Pertamina atas kegiatan operasi minyak dan gas bumi yang diperlukan sebelum tanggal efektif yang pelaksanaannya dilakukan oleh Kontraktor Eksisting. Biaya yang dikeluarkan oleh Pertamina tersebut masuk dalam biaya operasi yang pengembaliannya dilakukan setelah tanggal efektif. 

Dengan amendemen ini maka Pertamina dapat berinvestasi lebih awal dan produksi Blok Mahakam akan terjaga. Ini semua sebagai bentuk kepercayaan pemerintah kepada Pertamina. Arcandra menuturkan amendemen menjadi dasar bagi Pertamina untuk investasi lebih awal terkait pengeboran mahakam guna menjaga tingkat produksi mahakam.

Work program and budget akan dilaksanakan 24-25 November 2017 akan dilakukan pengeboran 6 sumur oleh Total dan 19 sumur oleh Pertamina Hulu. Dia bilang Pertamina berencana untuk melakukan investasi yang diperkirakan sebesar USS 180 juta dalam bentuk kegiatan pemboran 19 sumur sebelum tanggal efektif. Dengan begitu diharapkan produksi gas bumi dari WK Mahakam dapat dipertahankan sekitar 1,2 BSCFD dan kondensat sekitar 20.000 BCPD pada tahun 2018-2019.

Amien mengungkapkan bunyi amandemen Kontrak Bagi Hasil ialah biaya pengeluaran untuk kegiatan pengeboran 19 sumur di Blok Mahakam pada 2017 masuk cost recovery di 2018. Apa yang dikeluarkan Pertamina setelah amandemen diteken sampai efektif di 1 Januari 2018, itu bisa masuk ke cost recovery. Tapi cost recovery-nya tahun 2018. Amien menuturkan perlindungan hukum mekanisme tersebut ialah revisi Peraturan Menteri ESDM Nomor 15 Tahun 2015 tentang Pengelolaan Wilayah Kerja Minyak dan Gas Bumi yang Akan Berakhir Kontrak Kerja Samanya. Beleid ini sudah rampung dan dalam proses dalam pencatatan lembar negara.

Dikatakannya mekanime umum dan cost recovery ialah pengeluaran setelah tanggal Kontrak Bagi Hasil efektif. Namun untuk Blok Mahakam berlangsung masa transisi dan diperlukan pengeluaran untuk pengeboran sebelum Kontrak efektif. Setelah dibor baru ditutup. Produksinya (19 sumur) baru dikeluarkan 2018 sehingga tidak akan drop produksinya. 

Direktur Utama Pertamina Dwi Soejipto mengatakan investasi senilai US$ 180 juta disiapkan pada masa transisi pengambilalihan Blok Mahakam di 2017. Investasi tersebut dimaksudkan untuk menjaga tingkat produksi blok Mahakam setelah dilakukannya amandemen Kontrak Bagi Hasil Mahakam.

Dwi menuturkan PT Pertamina Hulu Mahakam telah menyusun Work Program and Budget (WP and B) Blok Mahakam 2017 dan sedang difinalisasi. Berdasarkan WP and B tersebut, dibantu oleh Total EP Indonesie sebagai pelaksana, Pertamina Hulu Mahakam menyiapkan kegiatan pengeboran tahun 2017 dengan target 19 sumur dengan nilai investasi sekitar US$180 juta. 

SKK Migas sedang menyiapkan petunjuk teknis pelaksanaan WP and B Pertamina Hulu Mahakam dengan prinsip kegiatan yang dilaksanakan oleh Total EP Indonesie dengan basis no cost no profit, dengan semua biaya dan risiko kegiatan menjadi beban Pertamina Hulu Mahakam. Sumur pemboran ditargetkan mulai produksi pada 1 Januari 2018. 

"Pertamina yang mendanai, pelaksanaan oleh Total. Dikatakannya Pertamina Hulu Mahakam bersama Total EP Indonesie dan Inpex Corporation sedang menyelesaikan perjanjian alih kelola yang meliputi Transfer of Operatorship Agreement (TOA) dan Bridging Agreement (BA). TOA yang telah ditandatangani para pihak pada 29 Juli 2016 akan diselaraskan dengan amandemen Kontrak Bagi Hasil Blok Mahakam.

Sedangkan BA diperlukan terkait dengan bantuan pelaksanaan kegiatan Pertamina Hulu Mahakam oleh Total Indonesie pada periode tahun 2017. Kami menargetkan penyelesaian Bridging Agreement dan amandemen TOA pada akhir November 2016. 

Presdir Total EP Indonesie Hardy menambahkan menjaga produksi migas saat alih kelola Blok Mahakam menjadi fokus utama. Pihaknya akan mengebor 6 sumur di 2017 mendatang untuk menekan laju penurunan produksi. Sedangkan mengenai Participating Interest (PI) sebesar 30 persen masih dalam pembahasan. PI 30 persen masih terus kita bicarakan. Tapi itu last priority pada saat sekarang ini.

Investor Daily, Page-9, Wednesday, Oct 26,  2016

Pertamina's Investment in Mahakam Approved

The Ministry of Energy and Mineral Resources finally approved the amendment to the Mahakam Block contract. With this amendment, PT Pertamina can enter the Mahakam Block before the expiration of the old operator contract. Currently, the Mahakam Block is managed by PT Total E&P Indonesie and will expire next year.

PT Total E&P Indonesie

The Minister of Energy and Mineral Resources, Ignasius Jonan, said that he approved the amendment to the production sharing contract for the Mahakam work area. The amendment to the cooperation contract was signed by SKK Migas and PT Pertamina Hulu Mahakam, as new investors for the Mahakam Block, Tuesday (25/10) at the Ministry of Energy and Mineral Resources office.

Blogger Agus Purnomo in SKK Migas

Jonan said that currently, the Mahakam Block gas production reaches 1,747 mmscfd and oil-condensate 69,186 bpd. With this amendment, it is hoped that the Mahakam Block production in 2018 can be maintained. Understandably, with this contract amendment, Pertamina can start investing in the Mahakam block starting in 2017. 

All costs incurred by Pertamina in the transfer of management will be included in cost recovery in 2018. Deputy Minister of Energy and Mineral Resources Arcandra Tahar said, with the approval of the Mahakam Block contract amendment, Pertamina could participate in the discussion of the work program and project budgeting or work program and budget (WP&B) in 2017.

The discussion will be held on 24-25 November 2016. The WP&B will agree on the activities that will be proposed by Total E&P Indonesie, as the operator and Pertamina as the investor. Arcandra said that so far PT Total E&P Indonesie plans to invest in drilling in six wells and Pertamina in 19 wells. Pertamina Director Dwi Soetjipto said that to drill 19 wells, Pertamina would invest US$ 180 million.

Because this is indeed a block where there is a decline in production, if nothing is done, the decline will be very drastic. We invest early so that the decline is not too drastic. The supervision is from SKK Migas," said Dwi.

President Director of Total E&P Indonesie Hardy Pramono said that with this drilling activity, his party would maintain production as well as possible. Hardy said the gas production target in 2017 was 1.4 to 1.45 BCF and condensate oil was around 50,000 BPD.

Kontan, Halaman : 15, Rabu, 26 Okt 2016

Oil and Gas Production is Hard to Maintain

       Ahead of the transfer of management from Total E&P to PT Pertamina on January 1, 2018, oil and gas production in the Mahakam Block, East Kalimantan was difficult to maintain. Pertamina was allowed to be involved in managing the block early and started investing US$180 million in 2017. 

Total

    With the reference exchange rate of the Jakarta Interbank Spot Dollar Rate of Rp. 13,022 per US dollar, Pertamina's initial investment was Rp. 2.343 trillion. Currently, the Mahakam Block gas production is 1,747 MMSCFD, and oil and condensate are 69,186 barrels per day.

the Mahakam Block

    Next year, gas production is estimated to drop to around 1,400 million MMSCFD, while oil and condensate production is around 50,000 barrels per day. Because this block is old, there will be a decline in production. We have prepared anticipation by planning 19 drilling wells with a fund of 180 million US dollars in 2017. The drilling of 19 wells will start production in 2018 or when Pertamina begins to fully manage the Mahakam Block.

    The hope is that if the 19 wells are in production, the rate of gas and oil production in the Mahakam Block can return to normal. Hardy said that the decline in production in the future is very likely due to the nature of fossil energy. However, the rate of decline is not too significant. 

    According to him, next year's production figure can still be considered high. Asked about Total's commitment to being involved in the management of the Mahakam Block when Pertamina took over, Hardy stated that his party had not yet made a decision.

    It will still see the development of the situation and conditions. Pertamina offers a 30 percent stake for Total in the Mahakam Block. As for the participation share for the regions (East Kalimantan Province) of 10 percent, Jonan asked Pertamina to implement the regulation. 

    There are regulations regarding participation shares for the regions. I believe Pertamina has a commitment of 10 percent and it must be implemented. It will be handed over to the local government.

Blogger Agus Purnomo in SKK Migas

    Pertamina can be involved in the management of the Mahakam Block early after the signing of the amendment to the Mahakam Block contract between Pertamina and SKK Migas. In addition to the issue of contract amendments, the government has also revised the Regulation of the Minister of Energy and Mineral Resources Number 15 of 2015 concerning the Management of Oil and Gas Working Areas whose Cooperation Contracts will expire. 

    Starting January 1, 2018, Pertamina took over the Mahakam Block as the operator with majority share ownership. As of December 31, 2017, the Mahakam Block is still managed by Total (France) and Inpex Corporation (Japan).

The share ownership of each investor is 50 percent. Currently, Total acts as operator. Citing the SKK Migas website, the Mahakam Block covering an area of ​​2,738.51 square kilometers began production in 1974.

Kompas, Page-17, Wednesday, Oct 27, 2016

Pertamina Invests in Mahakam

The process of transferring the management of the Mahakam Block oil and gas field from Total E&P Indonesie to PT Pertamina has been completed. The Minister of Energy and Mineral Resources, Ignasius Jonan, gave his approval for the amendment to the Product Sharing Contract (PSC) for the Mahakam block in East Kalimantan. Starting next year, Pertamina will be able to enter for investment.

The PSC amendment for the 2018-2038 period was signed by Pertamina Hulu Mahakam, a subsidiary of Pertamina, and SKK Migas. This change has become the entry point for Pertamina to carry out the transition process since 2017.

Blogger Agus Purnomo in SKK Migas

"The process of managing the Mahakam Block has been completed. The agreement has been signed and can be implemented immediately.

Jonan explained that currently, the production of oil and condensate from the Mahakam field has reached 69 thousand BPD. Meanwhile, gas production reached 1,747 mmscfd. He stated that Pertamina would immediately invest in it so that when it became an operator in January 2018, production would not decline. 

Deputy Minister Arcandra added that before the signing was done, the two companies had repeatedly held workshops. Starting from the matter of technology transfer, licensing issues, to the Mahakam Block workers. On the 24th and 25th of November, he said, the Mahakam work program & budget (WP&B) has been finalized.

the Mahakam Block

He said Total has been carrying out activities in the black goldfield since 1966 or for 50 years at the Iranian refinery. Pertamina, who proved its capacity to manage the Mahakam Block, Head of SKK Migas Amien Sunaryadi explained, the amendment to the Mahakam Block PSC was also supported by the revision of the Minister of Energy and Mineral Resources Regulation number 15 of 2020 concerning 15 oil and gas working areas whose contract terms would expire. This change became the basis and legal protection that Pertamina could incur operating costs in 2017.

This expenditure will be recognized as cost recovery in 2018. At that time the PSC (Pertamina) came into effect. Because it is still an investment, the 19 wells drilled by Pertamina are not for production. However, these wells were closed and opened in 2018 to maintain performance. Meanwhile, Total's six wells are still producing as usual. Pertamina president director Dwi Soetjipto explained that the investment for the 19 wells was prepared at USD 180 million or around Rp 2.3 trillion.

When asked about what guarantees were given so that there would be no decline in production, Dwi stated that there was actually a natural decline. His team already knew that and started preparing. If nothing is done, production will decrease. 

In accordance with the projection, if you can enter early, the decline will not be too significant. After this, Pertamina Hulu Mahakam and Total will finalize the transfer of operatorship agreement (TOA) and bridging agreement. Both are expected to be completed by the end of November.

President Director of Total Hardy Pramono said next year's production might drop. Gas, for example, becomes 1.45 mmscfd. For oil, it also fell to 50 thousand BPD. Regarding the offer for Total to re-enter Mahakam with a share of 30 percent, there has been no decision. 

The reason is that at this time the most important thing is the process of transfer of management so that production does not decrease. He stated that there would be further discussion before Total took up the offer to cooperate. Especially the discussion about terms and conditions.

Jawa Pos, Page-6, Wednesday, Oct 26,  2016

Transfer to Manage Mahakam Block, Pertamina Prepares IDR 2.3 T

PT Pertamina has prepared an investment fund of USD 180 million or equivalent to Rp. 2.33 trillion to drill 19 wells as part of the transition period for the takeover of the Mahakam Block in 2017.

Investments were made to maintain the block's production level after the Mahakam Block Production Sharing Contract amendment was made. On Tuesday (Oct 25), the Minister of Energy and Mineral Resources, Ignasius Jonan, gave his approval for the Amendment to the Production Sharing Contract for the Mahakam block.

This step was taken to maintain the continuity of oil and gas production during the transfer of management of the Mahakam Working Area. This profit-sharing contract amendment is part of the process of transferring the management of the Mahakam Block from Total E&P Indonesie to PT Pertamina (Persero). 

As is known, Total's contract in Mahakam expires on December 31, 2017. Starting January 1, 2018, Pertamina becomes the new operator of the block which produces 1,740 MMSCFD of gas and 69,186 bpd of oil. Pertamina President Director Dwi Soetjipto said that the Mahakam Block amendment for the 2018-2038 period had to be carried out.

This step is also a way for Pertamina to make a good transition from 2017. This profit-sharing contract amendment, said Dwi, allows Pertamina to start the transition step in managing the Mahakam Block earlier. Namely as of January 1, 2017, with the aim of maintaining the production level of this largest gas-producing working area.

Next, we will have detailed talks with Total E&P Indonesie as the current operator to ensure the transition goes well. Dwi explained that Pertamina Hulu Mahakam had finalized the preparation of the 2017 Mahakam Block Work Program and Budget (WP&B).

Based on the WP&B, assisted by Total E&P Indonesie as the executor, Pertamina Hulu Mahakam has prepared drilling activities in 2017 with a target of 19 wells with an investment value of around USD180 million. So it is expected that natural gas production from the Mahakam Block can be maintained at around 1.2 BSCFD and condensate around 20,000 BCPD in 2018-2019.

Blogger Agus Purnomo in SKK Migas

SKK Migas is preparing technical instructions for the implementation of Pertamina Hulu Mahakam WP&B with the principle of activities carried out by Total E&P Indonesie on a no-cost no-profit basis. With all costs and activities risks borne by Pertamina Hulu Mahakam. 

The drilling well is targeted to start production on January 1, 2018. Pertamina Hulu Mahakam together with Total E&P Indonesie and Inpex Corporation is finalizing a management transfer agreement which includes a Transfer of Operatorship Agreement (TOA) and a Bridging Agreement (BA). The TOA which was signed by the parties on July 29, 2016, will be aligned with the amendments to the Mahakam Block PSC.

Meanwhile, a Bridging Agreement is required related to the assistance for the implementation of Pertamina Hulu-Mahakam activities by Total Indonesie in the 2017 period. We are targeting the completion of the Bridging Agreement and amendment of the Transfer of Operatorship Agreement by the end of November 2016.

Deputy Minister of Energy and Mineral Resources Arcandra Tahar said, in addition to the 19 wells drilled by Pertamina Hulu Mahakam (PHM/a subsidiary of Pertamina that will manage Mahakam) in 2017, Total also drilled 6 wells. Hopefully, it can take place according to the previously agreed plan.

The Mahakam Production Sharing Contract was signed between SKK Migas and PT Pertamina Hulu Mahakam on 29 December 2015 and will become effective on 1 January 2018. With this amendment, Pertamina will invest in drilling wells in the block on 1 January 2017.

Duta Masyarakat, Page-1, Wednesday, Oct 26, 2016

Pertamina Ready to Drill in Mahakam

PT Pertamina is preparing an investment of US$ 180 million in the transition period for the Mahakam Block management after obtaining certainty through an amendment to the production sharing contract for the working area.

Blogger Agus Purnomo in SKK Migas

The amendment was signed by Pertamina's subsidiary, PT Pertamina Hulu Mahakam (PHM), SKK Migas, Tuesday (Oct 25). Pertamina President Director Dwi Soetjipto said the amendment was a way for the company to enter the Mahakam Block starting next year. The previous Production Sharing Contract/PSC was signed on 29 December 2015 and will become effective on 1 January 2018.

This PSC amendment allows Pertamina to begin the transition to the Mahakam Block management earlier, namely as of January 1, 2018, with the aim of maintaining the production level of this largest gas-producing working area. 

Total Oil

Dwi revealed that PHM had compiled the 2017 Mahakam Block Work Program and Budget/WP&B and was being finalized. Based on the WP&B, assisted by Total E&P Indonesie (TEPI) as the executor, Pertamina Hulu Mahakam is preparing for drilling activities next year with a target of 19 wells with an investment value of around US$ 180 million.

Inpex Corporation

PHM together with TEPI and Inpex Corporation is finalizing a management transfer agreement which includes a transfer of operatorship agreement (TOA) and a bridging agreement (BA). The TOA which was signed by the parties on 29 July 2016 will be aligned with the Mahakam Block PSC amendment, while the BA is required in relation to Total assistance in the implementation of PHM activities in the 2017 period.

The Minister of Energy and Mineral Resources, Ignasius Jonan, explained that the amendment must indeed be carried out to provide legal certainty in the transition period of Mahakam Block management.

This amendment can also maintain the continuity of oil and gas production as well as provide legal certainty in the implementation of activities during the transfer of operation of the Mahakam block working area from the existing contractor Total Indonesie to Pertamina.

Head of SKK Migas Amien Sunaryadi said the amendment would allow PHM to spend on operational costs. The expenditure will be recognized as part of the 2018 cost recovery.

President & General Manager of TEPI Hardy Pramono added that the transfer of management is the most important thing at this time. The goal is to prevent a drastic decline in oil and gas production. The point is how to keep decline to a minimum. Six wells were drilled for 2017 and 19 wells were drilled for Pertamina.

Bisnis Indonesia, Page-15, Wednesday, Oct 26, 2016

Regulatory Reform Needs, Accelerate Oil and Gas Infrastructure

According to an economic observer from Airlangga University, Dr. Nafik HR, the current government must reform its economic policies which are still using a neoliberal paradigm by replacing them with economic policies that are in favor of the people's and national interests and of course constitutional.

Let's just say frankly that the abundant natural wealth so far has been managed by foreign parties, and it is very profitable for them. Therefore, this is what must be taken over to become fully national control.

Then protect the control and development as well as the use of alternative energy such as geothermal, hydropower, solar power, and others that are still very potent. Later it can be managed by state companies such as Pertamina or other national private companies, to help the Indonesian government reduce national imports and in order to increase the production of domestic energy resources and consumption.

Of course, to manage this abundant oil and gas sector and alternative energy, Pertamina needs full support, especially regulations from the government, because so far it turns out that, in terms of managing oil and gas resources, Pertamina is not given the main authority and especially when compared to foreign companies such as Petronas (Malaysia). ), Shell (Netherlands), Chevron (USA), Total (France), ConocoPhillips (USA), ExxonMobil (USA), CNOOC (China), ENI (Italy), KUFPEC (Kuwait), British Petroleum (UK), and so. Just look at how the Regulation of the Minister of Energy and Mineral Resources Number 15 of 2015 is actually very detrimental to Pertamina.

So that whenever this country is declared to exist, the hope that this nation will have energy independence will definitely not be realized. The government's mistakes in the past in managing our natural wealth should be used as a lesson so that in the future it will be returned again for the prosperity of the people.

A legal observer from the University of Muhammadiyah Surabaya (UMS) Umar Sholahudin assessed that regulation is still seen as one of the homework that must be done in national development planning. Umar admits that there are many overlapping, multi-interpreted, disharmony, or inconsistent laws and regulations, all of which actually disturb the investment climate or economic growth, for example, there are regulations governing the same sector but with different mechanisms.

Not a single state institution knows the exact number of laws and regulations issued by the central government and local governments. It means that the government, and the House of Representatives (DPR), are not serious about reforming regulations. The Minister of Energy and Mineral Resources Regulation No. 15/2015 on the management of Oil and Gas working areas whose contract period will expire is very clearly detrimental to Pertamina as a state company.

This ministerial regulation considers Pertamina to be the same as other oil and gas companies when it wants to take over the management of the oil and gas Working Area (WK) which will expire. The full authority of the Ministry of Energy and Mineral Resources to choose/determine which companies will be granted oil and gas management concessions will undermine Pertamina's important role.

In fact, the ministerial regulation has clearly stated that the government does not at all give guarantees to Pertamina to control the concession of the oil and gas working area which will expire, even though there has been a Government Regulation of the Republic of Indonesia Number 35 of 2004 which favors the national interest in terms of controlling national oil and gas resources.

In short, Pertamina must be more empowered, play a dynamic role in obtaining full concessions or the holder of all concessions for all projects at the forefront of the oil and gas and energy sectors so that they have a major impact on Pertamina's progress, and can choose partners if necessary.

In the 2015-2019 National Medium-Term Development Plan (RPJMN) stipulated by Presidential Regulation No. 2 of 2015, energy security is described as to the extent to which energy can be provided in a timely manner and with guaranteed availability, affordable prices, and acceptable quality.

The indicators are the amount of energy, the availability of infrastructure, the price of energy, the quality of energy, as well as the energy portfolio or mix. Energy security also has an element of sustainability so its management must pay attention to the carrying capacity of the environment. According to Dwi Sutjipto, the government is serious about realizing energy independence, as evidenced by the acceleration in the development of energy infrastructure projects.

Various regulations stimulate the development of energy sources at a time when there is a lack of discovery of national oil and gas reserves and fluctuations in world oil prices. The acceleration of energy infrastructure is the main key to creating energy independence now and in the future.

According to Dwi Sutjipto, Pertamina has become the backbone of national energy fulfillment. Not only contributing to the production of energy sources in the form of oil and natural gas which contribute as foreign exchange for the country, Pertamina also has the task of providing and distributing the ever-increasing supply of fuel oil (BBM) and gas.

Pertamina's Vice President of Corporate Communication Wianda Pusponegoro explained as a national oil company (NOC) Pertamina has the responsibility to ensure that energy supply is always in a safe condition for national energy security, under any circumstances. In order for this to be realized, Pertamina has launched 5 strategic priorities, namely, the development of the upstream sector, efficiency in all lines, increasing the capacity of refineries and petrochemicals, developing infrastructure and marketing, and improving the financial structure.

Wianda Puponegoro

According to Wianda, the five strategic priorities are implemented through various innovations. Pertamina's innovations include ensuring that all projects to support energy independence continue. Such as refinery development projects and the construction of new refineries, as well as the development of marketing infrastructure continues according to the established roadmap. International business development is a critical factor for Pertamina to develop into an international class company and to support the realization of national energy security.

Bhirawa, Page-4, Wednesday, Oct 26, 2016